BENGUET EXPLORATION, INC., petitioner, vs. COURT OF APPEALS, SWITZERLAND GENERAL INSURANCE, CO., LTD.

, and SEAWOOD SHIPPING, INC.,respondents. DECISION

MENDOZA, J.:

This is a petition for review on certiorari of the decision, dated June 30, 1994, and resolution, dated September 29, 1994, of the Court of Appeals[1] which affirmed the decision of the Regional Trial Court, Branch 149, Makati, dismissing the complaints filed by petitioner against herein private respondents, and denied petitioners motion for reconsideration, respectively. The background of this case is as follows: On November 29, 1985, petitioner Benguet Exploration, Inc. (Benguet) filed a complaint for damages against Seawood Shipping, Inc. (Seawood Shipping) with the Regional Trial Court of Makati, which was docketed as Civil Case No. 12394 and assigned to Branch 149.[2] On March 4, 1986, petitioner Benguet filed another complaint for damages against respondent Switzerland General Insurance, Co., Ltd. (Switzerland Insurance), which was docketed as Civil Case No. 13085[3] and assigned to Branch 148 of the court. The two cases were consolidated. Switzerland Insurance filed a third-party complaint against Seawood Shipping, praying that the latter be ordered to indemnify it for whatever might be adjudged against it in favor of petitioner.[4] Thereafter, the cases were jointly tried, during which petitioner Benguet presented its employees, Rogelio Lumibao and Ernesto Cayabyab, as witnesses. Rogelio Lumibao, marketing assistant of Benguet, was in charge of exportation. His responsibilities included the documentation of export products, presentations with banks, and other duties connected with the export of products. He explained that private respondent Seawood Shipping was chartered by petitioner Benguet to transport copper concentrates. The bill of lading (Exh. A) stated that the cargo, consisting of 2,243.496 wet metric tons of copper concentrates, was loaded on board Sangkulirang No. 3 at Poro Point, San Fernando, La Union. It was insured by Switzerland Insurance (marine insurance policy was marked Exh. C). When the cargo was unloaded in Japan, however, Rogelio Lumibao received a report (Exh. B), dated August 19, 1985, from a surveyor in Japan stating that the cargo was 355 metric tons short of the amount stated in the bill of lading. For this reason, petitioner Benguet made a claim of the loss to Seawood Shipping and Switzerland Insurance. In its letter, dated August 21, 1985 (Exh. D), petitioner Benguet made a formal demand for the value of the alleged shortage. As both Seawood Shipping and Switzerland Insurance refused the demand, petitioner Benguet brought these cases against Seawood Shipping and Switzerland Insurance.[5] On cross-examination, Lumibao admitted that he did not see the actual loading of the cargo at Poro Point and that his knowledge was limited to what was contained in the bill of lading which he received about two days after the loading. Lumibao testified that at Camp 6, Kennon Road, Baguio, the copper concentrates were weighed prior to being transported to Poro Point,

where they were once more weighed before being loaded on the vessel. But again he admitted that he had not seen the actual weighing and loading of the copper concentrates because he was not the one in charge of the operation. Nor was he in Japan when the cargo was unloaded. He also did not know how to perform the procedure for weighing cargo. Thus, he could not determine the truth or falsity of the contents of the draft survey. He only knew that there was in fact a shortage based on his reading of the draft report.[6]Further, Lumibao testified that, although he prepared the export declaration, he did not prepare the bill of lading. The bill of lading was made on the basis of the draft survey conducted by the Overseas Merchandise Inspection Co., Ltd. or OMIC.[7] Some other person undertook the weighing of the cargo, and Lumibao was only informed by telephone of the cargos weight during its loading and unloading. Lumibao had nothing to do with the preparation of the bill of lading, the weighing of the copper concentrates, and the shipment of the cargo. He did not accompany the trucks which transferred the cargo from Baguio to Poro Point. He was not on the ship when the cargo was loaded at Poro Point. Nor did he know if spillage occurred during the loading or unloading of the copper concentrates. Lumibao said that the buyer of the copper concentrates was the Brandeis Intsel Co., Inc. Upon receipt of the cargo, Brandeis Intsel Co., Inc. paid for the cargo based on its weight in dry metric tons, or 90 percent more or less of the price of 2,243.496 tons, the weight of the cargo in wet metric tons. With regard to the insurance policy, he testified that petitioner Benguet made no objection to any of the terms stated on the face of the policy.[8] Ernesto Cayabyab next testified for petitioner. He had been with Benguet for 13 years and, at the time of his testimony, he was secretary of Nil Alejandre, manager of Benguet. According to Cayabyab, on July 28, 1985, he was sent to the warehouse (bodega) at Poro Point, La Union to assist in the loading of the copper concentrates. These copper concentrates were to be loaded on the ship Sangkulirang No. 3. Cayabyab said he was present when the cargo was loaded on the ship, as evidenced by the Certificate of Loading (Exh. E), Certificate of Weight (Exh. F), and the Mates Receipt (Exh. G), all dated July 28, 1985. According to Cayabyab, the Marine Surveyor and the Chief Mate would go around the boat to determine how much was loaded on the ship. Cayabyab stated that he saw petitioner Benguets representative and his immediate superior, Mr. Alejandre, and the Inspector of Customs, Mr. Cardenas, sign the Certificate of Weight. Cayabyab also witnessed the ship captain sign the Certificate of Weight,[9] which stated therein that 2,243.496 wet metric tons of copper concentrates were loaded on the ship.[10] Cayabyab likewise confirmed the authenticity of the Mates Receipt, saying that he witnessed the Chief Mate sign the document.[11] When cross-examined, Cayabyab said that, as a secretary, his duties included computing the companys daily main production in the mine site and accompanying his superior, Mr. Alejandre, during shipments. He explained that the copper concentrates were transported by dump trucks from the mining site to Poro Point for over a month, possibly even three to six months. Cayabyab went to Poro Point on July 27, 1985 to witness the loading of the copper concentrates on the vessel Sangkulirang No. 3. But the copper concentrates had already been delivered and stored in a bodega when he arrived. These concentrates were placed on the cemented ground inside thebodega after their weight was recorded. Describing the procedure for weighing, he said that the trucks, without the copper concentrates, were weighed. Then, after they had been loaded with copper concentrates, the trucks were placed in the bodega and

weighed again. To determine the weight of the copper concentrates, the weight of the trucks was deducted from the weight of the trucks loaded with copper concentrates. The copper concentrates were then loaded on the ship by means of a conveyor at the average rate of 400 tons an hour. Cayabyab did not know, however, how many trucks were used to load the entire cargo of the copper concentrates nor did he know exactly how many hours were spent loading the copper concentrates to the ship. He could only remember that he reported for work in the morning and that he worked overtime because he had to wait until the loading of the cargo was finished before he could leave. During the loading, he moved from place to place, and his attention was sometimes distracted. Thus, he could not tell with certainty that no spillage took place during the loading. The figure of 2,243.496 wet metric tons was computed by the Marine Surveyor and the Chief Mate.[12] Respondent Switzerland Insurance then presented its evidence. Three witnesses, Eduardo Pantoja, Anastacio Fabian, and Edgardo Dio, testified for it. Eduardo Pantoja, assistant branch manager of respondent Switzerland Insurance in the Philippines, testified that he prepared the data and conditions of the marine insurance policy of petitioner Benguet using information furnished by the latter, although some of the conditions attached to the policy were conditions Switzerland Insurance attached to all the marine policies issued by it. Pantoja stated that the figure of 2,243.496 wet metric tons contained in the policy of Benguet was taken from the latters declaration. Switzerland Insurance relied on the value of the cargo declared by the insured on the basis of the principle of uberrimae fidei, i.e., the insured must act in the utmost good faith.[13] One of the conditions set forth in the marine policy (Exh. 8) was that the [w]arranted vessel is equipped with steel centerline bulk head. According to Pantoja, this condition was specifically included in the policy because the nature of the cargo warranted the same, and Switzerland Insurance would not have accepted the policy had such condition not been attached. The purpose of the centerline bulkhead was to prevent the copper concentrates from shifting while being transported on the ship. Upon verification by Certified Adjusters, Inc., adjusters of Switzerland Insurance, it was found that the vessel Sangkulirang No. 3 did not have a steel centerline bulkhead. Pantoja identified a letter, dated February 13, 1986, sent by his company to petitioner Benguet canceling its insurance contract because the carrying vessel was not equipped with a steel centerline bulkhead as warranted under the policy (Exh. 7a). Enclosed was Check No. HSBC 419463 for P98,174.43 representing the refund by Switzerland Insurance of the premium payments, documentary stamps, and premium taxes paid by petitioner Benguet (Exh. 7). He testified that Switzerland Insurance paid its legal counsel P40,000.00 as attorneys fees plus appearance fees.[14] On cross-examination, Pantoja explained that the company had its own system of determining various rates of insurance. Several factors were taken into consideration, such as the nature of the goods, the manner by which they were packed, and the destination of the cargo. For example, Switzerland Insurance would anticipate pilferages if the cargo involved household goods or, in the case of chemicals, it would consider the possibility of spillage. Pantoja, however, stated that he did not make any investigation in this case but used only his previous experience and project knowledge in dealing with similar cases. He admitted that Switzerland Insurance checked whether the ship had a steel centerline bulkhead only after a claim had been made by petitioner Benguet. He explained, however, that it was impossible for them to make the investigation before the execution of the marine policy because they had only one day to check whether the ship had a steel centerline bulkhead and the ship at that time was

not in Manila but in Poro Point. He reiterated that good faith dealing with the insured included relying on the truth of the latters representations. There was little risk involved in relying on the insureds representations because the company would not have accepted the risk if it found that the conditions in the policy had not been complied with. Switzerland Insurance refused Benguets demand because non-compliance with the condition that the ship be equipped with a steel centerline bulkhead rendered the marine insurance policy null and void from the beginning. This is why Switzerland Insurance refunded the premium paid by petitioner Benguet. Pantoja stated that petitioner Benguet did not claim that the loss was caused by the shipping of the cargo because it did not know the cause of the shortage.[15] Another witness for Switzerland Insurance was Anastacio Fabian, the marine manager of Certified Adjusters, Inc. He testified that he went to Poro Point where the shipment was loaded for transport to Japan. It took him almost two months to finish his investigation and to come up with a written report (Exh. 12). He prepared a letter, dated January 31, 1986, seeking a certification from Capt. Jae Jang of Sangkulirang No. 3 on whether the ship was equipped with a steel centerline bulkhead (Exh. 5). In response thereto, respondent Seawood Shipping sent a letter, dated February 1, 1986, stating therein that the vessel was not equipped with a steel centerline bulkhead (Exh. 6). This steel centerline bulkhead was a steel separation of a vessel for the purpose of preventing the vessel from sinking, especially in heavy weather. Pictures of the ship were taken by Wise Insurance showing that the vessel did not have a steel centerline bulkhead (Exhs. 15 to 15-H). Fabian also identified petitioner Benguets export declaration (Exh. 11) which provides therein that the cargo loaded on the ship weighed 2,050 wet metric tons or 1,845 dry metric tons.[16] On further direct examination, he testified that Certified Adjusters, Inc.s president, Mr. Edgardo Dio, wrote a letter, dated January 13, 1986, to the shipping company inquiring as to the circumstances surrounding the loss of the cargo (Exh. 17). Seawood Shipping responded to Certified Adjusters, Inc. in a letter, dated January 16, 1986, explaining that the weight of the cargo might have been increased by the rains which occurred during the loading, and that the shortage upon unloading might be due to the moisture which evaporated during the voyage from the Philippines to Japan. Fabian testified that the moisture on the copper concentrates increased the weight of the cargo. Fabian said that during his investigation he asked how and when the shipment was loaded in the vessel and where it was loaded. He also checked records of the loading of the cargo. Although he admitted that the records show that a shortage of the copper concentrates had occurred when these reached Japan, he attributed it to the rains which occurred during the loading of the copper concentrates which increased their weight, although he conceded that it was not possible that the rains would cause a shortage of around 300 metric tons. He did not know what could have caused the shortage.[17] The last witness to testify for the defense was Edgardo Dio, president and general manager of Certified Adjusters, Inc. He testified that his company conducted an investigation and found that the vessel Sangkulirang No. 3was not equipped with a steel centerline bulkhead. The main function of the steel centerline bulkhead was to prevent shifting of the copper concentrates during transport. If there was no steel centerline bulkhead, the vessel was liable to sink. He stated that the ship had two holds, one of which was loaded with petitioner Benguets copper concentrates and the other with a Lepanto shipment. Dio identified photographs showing that

only a wooden partition separated the two cargoes on both holds (Exhs. 15-A to 15-G). He testified that his company wrote a letter to the shipping company inquiring about the shortage which occurred on petitioner Benguets copper concentrates. He expressed doubt that the loss of moisture of the copper concentrates caused the shortage because these were actually mixed with some water to keep them from heating up or to prevent spontaneous combustion. According to Dio, it was possible that some shifting of the cargo occurred as indicated by the photographs of the ship.[18] Based on the evidence presented, the trial court rendered its decision on July 2, 1990 dismissing petitioners complaint as well as Switzerland Insurances third-party complaint against Seawood Shipping. On appeal, its decision was affirmed by the Court of Appeals.[19] Petitioner Benguet moved for reconsideration, but its motion was denied.[20] Hence this petition. Petitioner Benguet contends that the Court of Appeals gravely erred in ruling that it failed to establish the loss or shortage of the subject cargo because such loss was sufficiently established by documentary and testimonial evidence, as well as the admissions of private respondents.[21] Petitioner argues that documents regarding the tonnage of the copper concentrates have been properly identified and that the bill of lading (Exh. A), the Certificate of Weight (Exh. F), and the Mates Receipt (Exh. G), all of which stated that 2,243.496 wet metric tons of copper concentrates were loaded on the ship, create a prima facie presumption that such amount was indeed what was loaded on the vessel. Petitioner asserts that the Draft Survey Report of OMIC (Exh. B) was sufficient evidence to prove that the cargo which arrived in Japan had a shortage of 355 wet metric tons. We find petitioners contentions to be without merit. First. It is settled that only questions of law may be raised on appeal by certiorari under Rule 45. The trial court, having heard the witnesses and observed their demeanor and manner of testifying, is in a better position to decide the question of their credibility. Hence, unless the factual findings complained of are not supported by the evidence on record or the assailed judgment is based on a misapprehension of facts, the findings of the trial court must be accorded the highest respect, even finality, by this Court.[22] It is noteworthy that the Court of Appeals made the same factual findings as did the trial court.[23] Contrary to this rule, petitioner is raising questions of facts as it seeks an evaluation of the evidence presented by the parties. However, we find no basis for concluding that both the trial court and the Court of Appeals misappreciated the evidence in this case. To the contrary, we find that petitioner failed to present evidence to prove that the weight of the copper concentrates actually loaded on the ship Sangkulirang No. 3 was 2,243.496 wet metric tons and that there was a shortage of 355 metric tons when the cargo was discharged in Japan. Petitioners own witness, Rogelio Lumibao, admitted that he was not present at the actual loading of the cargo at Poro Point, his information being limited to what was contained in the bill of lading. As he was not in charge of the operation, he did not see the actual weighing and loading of the copper concentrates. Nor did he prepare the bill of lading. He only verified the weight of the cargo, from the time it was loaded on the ship to the time it was unloaded in Japan, through the telephone. Neither was he present when the cargo was discharged in Japan.[24] Thus,
Lumibao testified:

Q A Q A Q

Now Exhibit A is a bill of lading which you identified? Yes, sir. Do you have anything to do in the preparation of this bill of lading? None, sir. In other words, you did not verify if the weight stated in the bill of lading was the actual weight of the copper concentrate loaded in the ship of the defendant Seawood Shipping Inc.?

....
A Q A Q A Q A Q A Q A Q The bill of lading is prepared on the basis of the draft survey. That is the procedure. And who undertakes the draft survey? For that particular shipment we required or hired the services of OMIC. In other words, your draft survey is from the point of origin to Poro Point up to the point of destination, Onahama, Japan, was done by OMIC? Yes, sir. And you have nothing to do with OMIC? None, sir. You are not an employee of OMIC? No, sir. Are you connected with it in any way? No, sir. In the Bill of Lading, you identified this document a xerox copy of the supposed original Bill of Lading and marked as Exh. A, are the wordings and figures copper concentrate 2,243.496 WMT this means weight per metric ton? Yes, sir. Did you have it [verified] if this was the actual weight loaded on the ship of the defendant Seawood, Shipping, Inc.? We were advised by the OMIC surveyor that the weight was loaded. Did you personally verify if these figures are true? Yes, by phone. Did you participate in weighing? No, sir. Just by phone. In other words somebody else made the weighing not you? Yes, sir. Did you personally do the verification of the actual weight loaded in the ship?

A Q A Q A Q A Q A Q

....

A Q A Q A Q A Q A Q A Q A Q A Q A Q A Q A

Yes, sir by phone. So you are informed [of] the weight actually loaded by phone? Yes, sir. Do you always verify by phone? That is only preliminary, while waiting what is the concluding things. (sic) That is after the surveyor has submitted the report to us. So in other words, all the time you have been basing your testimony on reports prepared by other person? Yes, sir. In fact, you have nothing to do with the preparation of the Bill of Lading? Yes, sir. You have nothing to do with the weighing of the copper concentrate? . . . . You have nothing to do [with] the transport of the copper concentrate from Camp 6, Baguio to Poro Point? None, sir. You did not even accompany the truck? No, sir. You were not at the shipside when this copper concentrate was loaded? No, sir. You did not know whether there was spillage when or while loading copper concentrates? Yes, sir. Neither were you on the ship on its way to Japan, were you? No, sir. You were not at Onahama, Japan, the port of destination? No, sir.[25]

On the other hand, Ernesto Cayabyab testified that he was at Poro Point when the copper concentrates were being loaded on the ship. Although he was present when the Certificate of Loading (Exh. E), Certificate of Weight (Exh. F), and the Mates Receipt (Exh. G) were signed at the loading site,[26] he admitted that he could not say for certain that no spillage occurred during the loading of the cargo on the ship because his attention was not on the cargo at all times.[27] It is evident that petitioners witnesses had no personal knowledge of the actual weight of copper concentrates loaded on the vessel and discharged in Japan. Lumibao had no part in the preparation of the bill of lading (Exh. A) and the Draft Survey Report prepared by OMIC (Exh. B). Nor was he present when the copper concentrates were loaded on the vessel or when the cargo was unloaded in Japan. He merely relied on the declarations made by other persons that 2,243.496 wet metric tons were indeed loaded on Sangkulirang No. 3 and that the cargo was short by 355 metric tons when unloaded in Japan. The same may be said of witness

Cayabyab. While present at the loading site and familiar with the procedure followed in loading the cargo, he admitted that he could not state for certain that no spillage occurred as his attention was not at all times focused on the loading operation. Moreover, none of the documents he identified, i.e., Certificate of Loading, Certificate of Weight, and Mates Receipt, were signed by him. He only witnessed the signing of these documents by other people. Hence, he was in no position to testify as to the truth or falsity of the figures contained therein. The testimonies of these witnesses were thus hearsay. It has been held:

Any evidence, whether oral or documentary, is hearsay if its probative value is not based on the personal knowledge of the witness but on the knowledge of another person who is not on the witness stand. Hearsay evidence, whether objected to or not, has no probative value unless the proponent can show that the evidence falls within the exceptions to the hearsay evidence rule.[28]
Second. Petitioner contends that the genuineness and due execution of the documents presented, i.e., Bill of Lading, Certificate of Loading, Certificate of Weight, Mates Receipt, were properly established by the testimony of its witness, Ernesto Cayabyab, and that as a result, there is a prima facie presumption that their contents are true. This contention has no merit. The admission of the due execution and genuineness of a document simply means that the party whose signature it bears admits that he signed it or that it was signed by another for him with his authority; that at the time it was signed it was in words and figures exactly as set out in the pleading of the party relying upon it; that the document was delivered; and that any formal requisites required by law, such as a seal, an acknowledgment, or revenue stamp, which it lacks, are waived by him.[29] In another case, we held that When the law makes use of the phrase genuineness and due execution of the instrument it means nothing more than that the instrument is not spurious, counterfeit, or of different import on its face from the one executed.[30] It is equally true, however, that

Execution can only refer to the actual making and delivery, but it cannot involve other matters without enlarging its meaning beyond reason. The only object of the rule was to enable a plaintiff to make out a prima facie, not a conclusive case, and it cannot preclude a defendant from introducing any defense on the merits which does not contradict the execution of the instrument introduced in evidence.[31]
In this case, respondents presented evidence which casts doubt on the veracity of these documents. Respondent Switzerland Insurance presented Export Declaration No. 1131/85 (Exh. 11)[32] which petitioners own witness, Rogelio Lumibao, prepared,[33] in which it was stated that the copper concentrates to be transported to Japan had a gross weight of only 2,050 wet metric tons or 1,845 dry metric tons, 10 percent more or less.[34] On the other hand, Certified Adjusters, Inc., to which Switzerland Insurance had referred petitioners claim, prepared a report which showed that a total of 2,451.630 wet metric tons of copper concentrates were delivered at Poro Point.[35] As the report stated:

It is to be pointed out that there were no actual weighing made at Benguet Exploration, Inc.s site. The procedure done was that after weighing the trucks before and after unloading at Philex Poro Point Installation, the weight of the load was determined and entered on Philex Trip Ticket which was later on copied and entered by the truck driver on Benguet Exploration, Inc.s Transfer Slip.[36]
Considering the discrepancies in the various documents showing the actual amount of copper concentrates transported to Poro Point and loaded in the vessel, there is no evidence of the exact amount of copper concentrates shipped. Thus, whatever presumption of regularity in the transactions might have risen from the genuineness and due execution of the Bill of Lading, Certificate of Weight, Certificate of Loading, and Mates Receipt was successfully rebutted by the evidence presented by respondent Switzerland Insurance which showed disparities in the actual weight of the cargo transported to Poro Point and loaded on the vessel. This fact is compounded by the admissions made by Lumibao and Cayabyab that they had no personal knowledge of the actual amount of copper concentrates loaded on the vessel. Correctly did the Court of Appeals rule:

In the face of these admissions, appellants claim of loss or shortage is placed in serious doubt, there being no other way of verifying the accuracy of the figures indicated in appellants documentary evidence that could confirm the alleged loss of 355.736 MT. Notwithstanding the figure stated in Bill of Lading No. PP/0-1 (Exhibit A) that 2,243.496 WMT of copper concentrates was loaded by appellant at the port of origin, it should be stressed that this is merely prima facie evidence of the receipt by the carrier of said cargo as described in the bill of lading. Thus, it has been held that recitals in the bill of lading as to the goods shipped raise only a rebuttable presumption that such goods were delivered for shipment and as between the consignor and a receiving carrier, the fact must outweigh the recital (Saludo vs. Court of Appeals, 207 SCRA 498, 509 [1992]). Resultingly, the admissions elicited from appellants witnesses that they could not confirm the accuracy of the figures indicated in their documentary evidence with regard to the actual weight of the cargo loaded at the port of origin and that unloaded at the port of destination, in effect rebuts the presumption in favor of the figure indicated in the bill of lading.[37]
WHEREFORE, the decision of the Court of Appeals is AFFIRMED
MANILA BAY CLUB CORPORATION, petitioner, vs. THE COURT OF APPEALS, MODESTA SABENIANO and MIRIAM SABENIANO, JUDITH SABENIANO, JOY DENNIS SABENIANO, et. al., respondents. RESOLUTION

FRANCISCO, J.:

After carefully perusing the instant motion for reconsideration, petitioner's arguments, in sum, dwell on the focal issues involved in the controversy which have been passed upon in the Court's July 11, 1995 Decision sought to be reconsidered. No reasons of significant and compelling import have been advanced to alter the Court's observation and conclusion that 1) petitioner's non-designation of private respondents as beneficiaries of the insurance policies was a violation of the "insurance clause" amounting to a "substantial", and not a mere "slight or casual", breach entitling private respondents to rescind the lease contract, and 2) the amount of rentals/damages petitioner was bound to pay was correctly adjudged by respondent Court of Appeals after slightly modifying the trial court's assessment. The Court, however, would like to make some additional disquisitions in response to certain noteworthy contentions raised by petitioner. Anent the issue of the rentals/damages, petitioner avers that "the Decision awards excessive damages" since "the Decision of this Honorable Court condemned the petitioner to pay, up front, the total sum of P12,029,800.00", "a staggering sum by any calculation . . . that will probably reduce the petitioner to utter bankruptcy"; It is likewise maintained that private respondents will be "unjustly enriched" simply because petitioner failed to present controverting evidence, or rebut Mrs. Sabeniano's testimony which, according to petitioner, is mere "speculation". We need to stress the one decisive fact that petitioner had all the opportunity at its disposal before the trial court to refute, with all allowable pieces of evidence it can produce, Mrs. Sabeniano's testimony or any other evidence of private respondents, and there is nothing to indicate that petitioner was ever denied such opportunity/opportunities by the trial court. The trial court, respondent court and this Court cannot be faulted for taking private respondents' uncontroverted evidence below vis-a-vis the monthly rentals on its face value no matter how "staggering" it may appear for petitioner's omission to rebut that which would have naturally invited an immediate, pervasive and stiff opposition from petitioner created an adverse inference that either the controverting evidences to be presented by petitioner will only prejudice its case, or that the uncontroverted evidence of private respondents indeed speaks of the truth. And such adverse inference, recognized and adhered to by courts in judging the weight of evidence in all kinds of proceedings, surely is not without basis the rationale and effect of which rest on sound, logical and practical considerations. The presumption that a man will do that which tends to his obvious advantage, if he possesses the means, supplies a most important test for judging of the comparative weight of evidence . . . If, on the supposition that a charge or claim is unfounded, the party against whom it is made has evidence within his reach by which he may repel that which is offered to his prejudice, his omission to do so supplies a strong presumption that the charge or claim is well founded; it would be contrary to every principle of reason, and to all experience of human conduct, to form any other conclusion. (Starkie on Evidence, p. 846, Moore on Facts, Vol. I, p. 544). Where the evidence tends to fix a liability on a party who has it in his power to offer evidence of all the facts as they existed and to rebut the inferences which the proof tends to establish, and he neglects or refuses to offer such proof, the natural inference is that the proof, if produced, instead of rebutting, would support the inference against him. (Pennsylvania R. Co. v. Anoka Nat. Bank, 108 Fed. Rep. 482, 486, 47 C.C.A. 454, per Caldwell, C.J., Moore on Facts, Vol. I, p. 545. Emphasis supplied) It is a well-settled rule that when the evidence tends to prove a material fact which imposes a liability on a party, and he has it in his power to produce evidence which from its very nature must overthrow the case made against him if it is not founded on

fact, and he refuses to produce such evidence, the presumption arises that the evidence, if produced, would operate to his prejudice, and support the case of his adversary. (Missouri, etc. R. Co. v. Elliott, 102 Fed. Rep. 96, 102, 42 C.C.A. 188, per Caldwell, C.J., Moore on Facts, Vol. I, p. 546. Emphasis supplied) No rule of law is better settled than that a party having it in his power to prove a fact, if it exists, which, if proved, would benefit him, his failure to prove it must be taken as conclusive that the fact does not exist. (Wheeling v. Hawley, 18 W. Va. 472, 476, per Patterson, J., quoted in Union Trust Co. v. McClellan, 40 W. Va. 405, 21 S.E. Rep. 1025, Moore on Facts, Vol. I, p. 544) Where the burden is on a party to a suit to prove a material fact in issue, the failure, without excuse, to produce an important and necessary witness to such fact raises the conclusive presumption that such witness's testimony, if introduced, would be adverse to the pretensions of such party. (Union Trust Co. v. McClellan, 40 W. Va. 405, 21 S.E. Rep. 1025, Moore on Facts, Vol. I, p. 545). The rule is that where a party to an issue on trial has proof in his power which, if produced, would render material, but doubtful, facts certain, the law presumes against him if he omits to produce that proof, and authorizes a jury to resolve all doubts adversely to his defense. (People v. Sharp, 107, N. Y. 427, 465, 14 N.E. Rep. 319, 342, per Danforth, J., Moore on Facts, Vol. I, p. 546). Where facts are in evidence affording legitimate inferences going to establish the ultimate fact that the evidence is designed to prove, and the party to be affected by the proof, with an opportunity to do so, fails to deny or explain them, they may wall be taken as admitted with all the effect of the inferences afforded. (Somers v. McCready, 96 Md. 437, 53 Atl. Rep. 1117, per Jones, C.J., Moore on Facts, Vol. I, p. 559) The ordinary rule is that one who has knowledge peculiarly within his own control, and refuses to divulge it, cannot complain if the court puts the most unfavorable construction upon his silence, and infers that a disclosure would have shown the fact to be as claimed by the opposing party. (Societe, etc., v. Allen, 90 Fed. Rep. 815, 817, 33 C.C.A. 282, per Taft, C.J., Moore on Facts, Vol. I, p. 561) The inference still holds even if it be assumed, for argument's sake, that Mrs. Sabeniano's testimony is improbable or weak, for it has likewise been said that: Even if a party's testimony is improbable, the failure of the opposite party to contradict it, although it was entirely within his power to do so if it were false, fully entitles it to belief. (Nutting v. El. R. Co., 21 N.Y. App. Div. 72, 47 N.Y. Supp. 327, Moore on Facts, Vol. I, p. 572) Weak evidence becomes strong by the neglect of the party against whom it is put in, in not showing by means within the easy control of that party that the conclusion drawn from such evidence is untrue. (Pittsburgh, etc., R. Co. v. Callaghan, 50 III. App. 678, 681, Moore on Facts, Vol. I, p. 572) As weak evidence is often strengthened by failure of an opposing party to contradict by evidence within his power, so the trier of facts may infer that testimony in chief is

worth its full face value when the other party is content to let it stand without crossexamination or contradiction by other evidence. (Moore on Facts, Vol. II, p. 1417) As petitioner seemed willing to admit private respondents' evidence bearing on the fair rental value without question, the trial court was well-justified in having done the same exhibiting, still, due consideration when it reduced the monthly rental value from P400,000.00 as per Mrs. Sabeniano's uncontroverted testimony, to P250,000.00. In answer, therefore, to petitioner's questions, i.e., ". . . does Mrs. Sabeniano's testimony cease to be speculation because the petitioner failed to present 'controverting evidence'?", and "The fact that Mrs. Sabeniano could have testified that she was offered P1 Million, indeed, P10 Million, indeed, P100 Million but would that, too, 'stand' simply because the petitioner failed to rebut it?", the Court is compelled, quite regrettably, to answer in the affirmative. With regard to petitioner's contention that it "did not raise a fresh matter on appeal", the Court merely reiterates that petitioner's invocation of the principles of trust found its way only for the first time in its "Motion For Reconsideration" of the respondent court's decision. If well-recognized jurisprudence precludes raising an issue only for the first time on appeal proper, with more reason should such issue be disallowed or disregarded when initially raised only in a motion for reconsideration of the decision of the appellate court. We cannot finally put this case to rest without confronting the perceived "unusual dispatch" in its resolution the petitioner is "genuinely disturbed" of consisting in the rendition of the judgment (July 11, 1995) having been made in six (6) months from the ponente's appointment to the Court on January 5, 1995. Petitioner amplifies that: 1) ". . . hardly has the ponente warmed his seat, the case would be decided . . .", and 2) ". . . when prior to the appointment of the ponente, it took the rest of the Justices of the Third Division of this Honorable Court more than a year to deliberate on the Petition, . . . ". It is the practice of the Court to encourage the speedy resolution of cases unloaded to a newlyappointed Member, especially those cases that are already ripe for decision and in which motions for their early resolution have been filed by either of the parties concerned, as in this case. This is the reason why it became imperative to resolve this case at the soonest possible time and without further delay, lest we be charged with footdragging on the case thereby putting the Court in a more objectionable situation. In fact, the undersigned ponente has come across some of the maiden decisions of one of petitioner's counsels, Mr. Justice Abraham F. Sarmiento, a distinguished former magistrate of this Court himself who the undersigned holds in high-respect, which were disposed of by him in less than six (6) months from the date of his appointment to the Court on January 26, 1987. To name a few are: People v. Decierdo, G.R. No. L-46956, May 7, 1987, 149 SCRA 496; People v. Saavedra, G.R. No. L-48738, May 18, 1987, 149 SCRA 610; People v. Pecato, G.R. No. L-41008, June 18, 1987, 151 SCRA 14; People v. Ferrera, G.R. No. L-66965, June 18, 1987, 151 SCRA 113;Madrigal & Company, Inc. v. Zamora, G.R. Nos. L-49023 and L-48237, June 30, 1987, 151 SCRA 355 (Labor Case); Banco Filipino Savings & Mortgage Bank v. Pardo, G.R. No. L-55354, June 30, 1987, 151 SCRA 481; and Del Rosario v. Hamoy, G.R. No. L-77154, June 30, 1987, 151 SCRA 719. And in all honesty, the undersigned ponente regards such prompt disposition as something commendable, not condemnable. WHEREFORE, premises considered, the Motion For Reconsideration is hereby DENIED with FINALITY.

SPS.

HENDRIK BIESTERBOS and ALICIA S. BIESTERBOS, petitioners, vs. HON. COURT OF APPEALS and EFREN E. BARTOLOME, respondents. DECISION

VITUG, J.:

On 18 April 1992, private respondent Efren E. Bartolome entered into a Contract to Sell with petitioners, the spouses Hendrik and Alice Biesterbos, in which Bartolome agreed to sell to the spouses Biesterbos one (1) unit of a duplex residential house and lot with an area of three hundred forty-five (345) square meters, more or less, situated at Crestwood Court Subdivision, Bakakeng Norte, Baguio City, for Two Million (P2,000,000.00) Pesos. The property was, at the time of the agreement, mortgaged to the Philippine National Bank (PNB). The contract to sell provided, among other stipulations, that 1. The BUYER shall pay to the OWNER the sum of One Million Pesos (P1,000,000.00), Philippine Currency, as downpayment upon signing of this Contract to Sell; the balance of One Million Pesos shall be paid by the BUYER to the OWNER on or before July 30, 1992; 2. The OWNER upon receipt of the downpayment will cause without delay and at his own expenses, the following: 2.1 Immediate transfer of possession of the townhouse, the subject of this contract to sell; 2.2 Installation of a water tank with a capacity of not less than 1,000 liters; 2.3 Partition or segregation of the lot area in accordance with the designated boundaries and corners indicated in the lot plan and to obtain a separate certificate of title to the property subject of this contract to sell; 2.4 Construction of another driveway for the use of the other unit of the Duplex to insure the BUYER will have an exclusive use of the existing driveway; 2.5 Fabrication and/or installation of a movable partition to be located between the living and dining area of the house. 3. The OWNER will execute a Deed of Absolute Sale in favor of the BUYER upon payment by the latter of the balance of One Million Pesos to the former; the

OWNER will also deliver the Transfer Certificate of Title to the BUYER free from all liens and encumbrances; 4. The OWNER will facilitate the transfer of ownership to the property into the name of the BUYER by paying the capital gains tax, Documentary and Science stamps, including the real estate tax for the current year; the BUYER on the other hand will shoulder the cost of transfer, registration and documentation fee; 5. That the OWNER, in addition to the sale of the house and lot subject of this contract, will advance for the BUYER the cost of the adjacent vacant lot belonging to his brother at an agreed price of SIX HUNDRED THOUSAND (P600,000.00) PESOS, Philippine Currency; the lot being Lot B-1-H consisting of Four Hundred (400) Square Meters and covered by Transfer Certificate of Title No. T-44549 of the Registry of Deeds of Baguio City; 6. The BUYER shall reimburse to the OWNER, the Six Hundred Thousand Pesos including the cost of transfer, documentation and registration fee, within a reasonable time or on/or before July 30, 1992, after ownership of the lot is transferred into the name of the BUYER.
[1]

On 23 April 1992, respondent received, by way of a downpayment, the amount of P972,486.00 from petitioners. Conformably with paragraph 5 of the agreement, respondent advanced for and in behalf of petitioners the sum of P600,000.00 for the purchase by the latter of an adjacent lot owned by respondents brother. In turn, the couple obligated themselves to reimburse respondent for the amount thus advanced. Petitioners failed to pay the amounts due and owing to respondent under the contract as so agreed. Nevertheless, on 05 August 1992, respondent received from petitioners the amount of P319,612.65; subsequent payments were also made by petitioners to respondent. Thus 1) Sept. 11, 1992 2) Oct. 10, 1992 348,849.43 but actually received on Sept. 15, 1992 345,259.36 but actually received on Oct. 12, 1992 50,000.00 10,000.00 but actually received on Mar. 24, 1993 30,000.00 paid by defendant-appellants at PNB 5,000.00 as evidenced by Exh. 5 of Original Records

3) Feb. 9, 1993 4) March 23, 1993 5) March 30, 1993 6) April 6, 1993 -

789,108.79 ======== Plus payments made on the following dates: April 17, 1992 July 30, 1992 TOTAL PAYMENT MADE 972,486.80 319,612.65 P2,081,208.24 ===========

[2]

Several demands were made by respondent for the full settlement by petitioners of their due obligation. In a letter, dated 20 December 1992, allegedly addressed to the Baguio residence of petitioners, respondent demanded the payment of the still unpaid balance of P710,713.16. On 24 March 1993, respondent claimed to have sent another letter to petitioners with the summary of the amounts due and payable, totaling P718,407.92, inclusive of Banks Interest and Bank charges From 01 August to 13 October 1992 Accrued Interest and Bank charges from 14 October 1992 to 30 March 1993 Cost of Maintenance and Caretaker P64,694.36 P 3,000.00
[3]

P94,021.80

On 18 May 1993, respondent reiterated his demand and informed petitioners that, because of the delay, respondent had to pay additional interests on his bank loan thereby increasing to P918,407.92 the sum due from petitioners. Except for this letter of 18 May 1993, petitioners denied having received any other demand-letter from respondent. In a letter of 03 July 1993, petitioners, through counsel, informed respondent that they had deposited the amount of P521,691.76, In Trust For Mr. Efren Bartolome, at the PNB branch in Baguio City, and that the money could be withdrawn by him at anytime during banking hours. Apparently not satisfied with the arrangement made with the bank, respondent, on 09 July 1993, filed a complaint for specific performance and damages against petitioners before the Regional Trial Court of Baguio City, specifically praying thusly:

WHEREFORE, premises considered, it is respectfully prayed of the Honorable Court, after due notice and hearing to render judgment in favor of the plaintiff and against the defendants, ordering the defendants jointly and severally to: 1. Comply with their obligations and pay unto the plaintiff the following:
a. P556,691.76 representing the balance unpaid arising out of the contract to sell plus interest until fully paid; b. P158,716.16 representing losses/damages actually incurred and paid to the bank; c. P2,900.00 representing the cost of transfer of the other lot plus P3,000.00 representing maintenance cost and caretaker of the duplex house and lot; d. P100,000.00 as moral damages; P100,000.00 as exemplary damages; e. P100,000.00 as attorneys fees plus P500.00 every hearing as appearance fees; and f. P20,000.00 as litigation expenses plus the cost of this suit.

2.

Plaintiff further prays for such reliefs just and equitable in the premises.

[4]

In their answer, petitioners contended that respondent had failed to comply with his obligations in accordance with the contract to sell such as, among other things, the immediate transfer of possession of the property and the construction and installation of a driveway. Petitioners also asserted that Alicia Biesterbos had paid respondent the following amounts even after the agreed period of 30 July 1992, to wit:
1) 17 April 1992 2) 30 July 1992 3) 11 September 1992 4) 10 October 1992 5) 09 February1993 6) 23 March 1993 7) 30 March 1993 8) 06 April 1993 Total Payments Made P972,486.80 P319,612.65 P348,849.43 P355,259.36 P 50,000.00 P 10,000.00 P 30,000.00 P 5,000.00 P2,081,208.24[5]

Petitioners claimed that the deadline for the payment of the balance of the due obligation was novated when private respondent continued to receive payments even beyond the 30th July 1992 deadline, and that they, being unaware of the loan obligation to the Philippine National Bank, should not be held liable for any alleged bank charges and interests. Petitioners prayed that the consignation of the amount of P521,691.76, representing what they averred to be the amount due from them under the contract to sell, be meanwhile approved by the trial court and respondent be made to transfer to them the absolute ownership of the property.

On 21 July 1994, the trial court issued an order denying the prayer for consignation for lack of merit. In time, the Regional Trial Court, Branch 7, of Baguio City finally rendered its decision, it adjudged: WHEREFORE, in view of all the foregoing, judgment is hereby rendered: (a) Declaring defendants Biesterbos to have complied with their obligation under the contract to sell with respect to the townhouse and lot; (b) Ordering plaintiff Bartolome to execute the corresponding deed of sale transferring the townhouse and lot to the defendants Biesterbos; (c) Ordering the plaintiff Bartolome to deliver the Transfer Certificate of Title to the defendants-buyers Biesterbos free from all liens and encumbrances as committed by him in the contract to sell; (d) Ordering the defendants Biesterbos to reimburse to the plaintiff P518,791.60 representing the balance of the P600,000.00 which the latter had advanced to the owner of the adjacent lot; (e) Ordering the defendants to pay the plaintiff P2,900.00 which represents the cost of the transfer of the other adjacent lot, which amount is admitted in the defendants pleading (answer); (f) Denying the claim of the defendants for the refund of P300,000.00 alleged overpayment for lack of merit; (g) Denying the claims for damages by both parties for lack of merit; (h) Costs of the suit to be shared by the contending parties.
[6]

Still feeling aggrieved, respondent appealed the case to the Court of Appeals. On 22 February 2000, the appellate court rendered a decision affirming that of the trial court except insofar as the latter had ordered the payment of interest on P518,791.76 representing the balance of the P600,000.00 which the latter (Bartolome) had advanced for petitioners as payment to the owner of the adjacent lot, with an interest of 12% per annum from the time the defendants-appellees defaulted in their payment up to the time of the filing of the complaint being in the nature of a contract of loan. In its resolution of 21 December 2001, the Court of Appeals granted the motion for reconsideration of respondent and ordered that the interest of 12% per
[7]

annum awarded to him should be paid from the time of default until full payment of the principal. Petitioners, in their petition for review before this Court, would now question the interest payment decreed by the Court of Appeals, contending that (a) The Court of Appeals committed grave abuse of discretion and error in law, as it violated the provisions of Art. 2209 of the New Civil Code, when it ordered herein petitioners to pay 12% interest per annum of the amount of P518,791.76, when no such or any interest was agreed upon by the parties; and (b) The Court of Appeals committed grave abuse of discretion and error in law when it ruled that the running of the period to pay such 12% interest per annum is from the time of default until full payment of the principal despite the fact that there was a valid tender of payment made by the petitioners even before the filing of the complaint.
[8]

The trial court and the appellate court correctly concluded that the agreement between the parties insofar as it had obligated (a) respondent to advance for the buyer (petitioners) the cost of the adjacent vacant lot belonging to his (respondents) brother at an agreed price of Six Hundred Thousand (P600,000.00) Pesos, and (b) petitioners to, in turn, reimburse to respondent the Six Hundred Thousand Pesos, including the cost of transfer, documentation and registration fee, within a reasonable time or on/or before July 30, 1992, after ownership of the lot is transferred to petitioners, was in the nature of a contract of loan or a forbearance. While the trial court and the appellate court did not make any categorical statement as to when an initial demand was made by respondent, the parties, however, agreed at the pretrial conference in the trial court to stipulate on the authenticity of the demandletter of 18 May 1993 sent to petitioners by Atty. George Florendo (respondents counsel). The Court would here then consider such date, absent any contrary showing, as the demand to occasion default.
[9] [10] [11]

In their letter of 03 July 1993, likewise included among the stipulation of facts of the parties during the pre-trial conference, petitioners, through counsel, informed respondent that the former had deposited the amount of P521,691.76 In Trust For Mr. Efren Bartolome at the PNB, Session Road, Baguio City, which sum could be withdrawn by respondent at anytime during banking hours. While such a procedure did not strictly constitute a valid tender of payment and consignation, still, it could be considered an act of good faith on the part of petitioners to fully settle their obligation. Equity and justice would demand that such an act, placing at the disposal of respondent
[12]

the deposited sum, should have the effect of suspending the running of the interest on said outstanding amount. In Gregorio Araneta, Inc. vs. De Paterno and Vidal, this Court said:
[13]

The matter of the suspension of the running of interest on the loan is governed by principles which regard reality rather than technicality, substance rather than form. Good faith of the offeror or ability to make good the offer should in simple justice excuse the debtor from paying interest after the offer was rejected. A debtor cannot be considered delinquent who offered checks backed by sufficient deposit or ready to pay cash if the creditor chose that means of payment. Technical defects of the offer cannot be adduced to destroy its effects when the objection to accept the payment was based on entirely different grounds. Thus, although the defective consignation made by the debtor did not discharge the mortgage debt, the running of interest on the loan is suspended by the offer and tender of payment.

With regard the payment of interest, the ruling of this Court in Eastern Shipping Lines, Inc. vs. Court of Appeals should be worthwhile reiterating for guidance. Thus [14]

I. When an obligation, regardless of its source, i.e., law, contracts, quasicontracts, delicts or quasi-delicts is breached, the contravenor can be held liable for damages. The provisions under Title XVIII on Damages of the Civil Code govern in determining the measure of recoverable damages. II. With regard particularly to an award of interest in the concept of actual and compensatory damages, the rate of interest, as well as the accrual thereof, is imposed, as follows: 1. When the obligation is breached, and it consists in the payment of a sum of money, i.e., a loan or forbearance of money, the interest due should be that which may have been stipulated in writing. Furthermore, the interest due shall itself earn legal interest from the time it is judicially demanded. In the absence of stipulation, the rate of interest shall be 12% per annum to be computed from default, i.e., from judicial or extrajudicial demand under and subject to the provisions of Article 1169 of the Civil Code. 2. When an obligation, not constituting a loan or forbearance of money, is breached, an interest on the amount of damages awarded may be imposed at the discretion of the court at the rate of 6% per annum. No interest, however, shall be adjudged on unliquidated claims or damages except when or until the demand can be established with reasonable certainty. Accordingly, where the demand is established with reasonable certainty, the interest shall begin to run from the time the claim is made judicially or extrajudicially (Art. 1169, Civil Code) but when such certainty cannot be so reasonably established at the time the demand is made, the interest shall

begin to run only from the date the judgment of the court is made (at which time the quantification of damages may be deemed to have been reasonably ascertained). The actual base for the computation of legal interest shall, in any case, be on the amount finally adjudged. 3. When the judgment of the court awarding a sum of money becomes final and executory, the rate of legal interest, whether the case falls under paragraph 1 or paragraph 2, above, shall be 12% per annum from such finality until its satisfaction, this interim period being deemed to be by then an equivalent to a forbearance of credit.
[15]

WHEREFORE, the petition is partly GRANTED. The questioned decision and resolution of the appellate court are hereby AFFIRMED with MODIFICATION, i.e., that the legal interest to be paid on the principal amount of P518,791.76 is TWELVE PERCENT (12%) per annum which shall commence from 18 May 1993 when extrajudicial demand was made on petitioners up until 03 July 1993 when petitioners notified respondent that the amount of P521,691.76 had been deposited in his name with the Philippine National Bank withdrawable by him at any time during banking hours. Another 12% interest per annum shall be paid on the amount due and owing as of, and from, the date of finality of this decision until full payment would have actually been made. No costs.

HENRY S. OAMINAL, petitioner, vs. PABLITO M. CASTILLO and GUIA S. CASTILLO, respondents. DECISION
PANGANIBAN, J.:

In the instant case, the receipt of the summons by the legal secretary of the defendants -- respondents herein -- is deemed proper, because they admit the actual receipt thereof, but merely question the manner of service. Moreover, when they asked for affirmative reliefs in several motions and thereby submitted themselves to the jurisdiction of the trial court, whatever defects the service of summons may have had were cured. The Case Before us is a Petition for Review under Rule 45 of the Rules of Court, seeking to nullify the March 26, 2002 Decision of the Court of Appeals (CA) in CA-GR SP No. 66562. The assailed Decision disposed thus:
[1] [2]

WHEREFORE, the [D]ecision dated 23 August 2001 is hereby NULLIFIED and SET ASIDE and Civil Case No. OZC-00-13 ordered DISMISSED, without prejudice. Costs against [petitioner].
[3]

The Antecedents The antecedents of the case were narrated by the CA as follows: On 09 March 2000, [Petitioner Henry Oaminal] filed a complaint for collection against [Respondents Pablito and Guia Castillo] with the Regional Trial Court [RTC] of Ozamis City (Branch 35) x x x. The complaint prayed that [respondents] be ordered to pay P1,500,000.00 by way of liquidated damages and P150,000.00 as attorneys fees. On 30 May 2000, the summons together with the complaint was served upon Ester Fraginal, secretary of [Respondent] Mrs. Castillo. On 06 June 2000, [respondents] filed their Urgent Motion to Declare Service of Summons Improper and Legally Defective alleging that the Sheriff's Return has failed to comply with Section (1), Rule 14 of the Rules of Court or substituted service of summons. The scheduled hearing of the Motion on 14 July 2000 did not take place because x x x [RTC] Judge [Felipe Zapatos] took a leave of absence from July 17 to 19, 2000[;] hence[,] it was re-scheduled to 16 August 2000. On 19 October 2000, [petitioner] filed an Omnibus Motion to Declare [Respondents] in Default and to Render Judgment because no answer [was] filed by [the latter]. [Respondents] forthwith filed the following: a. Omnibus Motion Ad Cautelam to Admit Motion to Dismiss and Answer with Compulsory Counter-claim dated 9 November 2000 which was set for hearing on 27 November 2000 at 8:30 a.m.; b. x x x Urgent Motion to Dismiss also dated 9 November 2000 which was also set for hearing on 27 November 2000 at 8:30 a.m. The said motion was anchored on the premise that x x x [petitioner's] complaint was barred by improper venue and litis pendentia; and c. Answer with Compulsory Counter-Claim dated 9 November 2000.

On 16 November 2000, x x x [the] judge denied [respondents] Motion to Dismiss, admitted [their] Answer, and set the pre-trial [on] 17 January 2001. On 24 November 2000, [respondents] filed an Urgent Motion to Inhibit Ad Cautelam against Judge [Zapatos], in the higher interest of substantial justice and the [r]ule of [l]aw x x x. On 27 December 2000, Judge [Zapatos] denied the motion and transferred the January 17th pre-trial to 19 February 2001. [Respondents] filed an Urgent Omnibus Motion for Reconsideration with the Accompanying Plea to Reset dated 22 January 2001. The motion requested that it be set for consideration and approval by the trial court on 05 February 2001 at 8:30 a.m. Said motion in the main prayed that an order be issued by the Honorable Court reconsidering its adverse order dated 16 November 2000, by dismissing the case at bar on the ground of improper venue or in the alternative, that the Honorable Presiding Judge reconsider and set aside its order dated December 27, 2000 by inhibiting himself from the case at hand. On 22 May 2001, Judge [Zapatos] ruled that [respondents] Omnibus Motion Ad Cautelam to Admit Motion to Dismiss and Answer with Counterclaim was filed outside the period to file answer, hence he (1) denied the Motion to Admit Motion to Dismiss and Answer; (2) declared [respondents] in default; and (3) ordered [petitioner] to present evidence ex-parte within ten days from receipt of [the] order, [failing] which, the case will be dismissed. On 23 August 2001, Judge [Zapatos] rendered a decision on the merits, with the following dispositi[on]: WHEREFORE, finding by preponderance of evidence, judgment is hereby rendered in favor of [petitioner], ordering [respondents] to pay x x x: 1) 2) 3) P1,500,000.00 by way of [l]iquidated [d]amages; P20,000.00 as attorney's fees and litigation expenses; and x x x cost[s].
[4]

On September 11, 2001, respondents filed with the CA a Petition for certiorari, prohibition and injunction, with a prayer for a writ of preliminary injunction or temporary restraining order (TRO). In the main, they raised the issue of whether the trial court had validly acquired jurisdiction over them.

On September 20, 2001, the appellate court issued a TRO to enjoin the lower court from issuing a writ of execution to enforce the latters decision. Ruling of the Court of Appeals The CA ruled that the trial court did not validly acquire jurisdiction over respondents, because the summons had been improperly served on them. It based its finding on the Sheriffs Return, which did not contain any averment that effort had been exerted to personally serve the summons on them before substituted service was resorted to. Thus, the appellate court set aside the trial courts Decision and dismissed, without prejudice, Civil Case No. OZC 00-13. Hence, this Petition.
[5]

Issues Petitioner submits the following issues for our consideration:

I

Whether respondents recourse to a Petition for Certiorari [was] appropriate when the remedy of appeal was available?
II

Whether the Decision of the trial court attained finality?

III

Whether the Honorable Third Division of the Court of Appeals [was] correct in entertaining and in granting the Writ of Certiorari when the facts clearly establish[ed] that not only was [an] appeal available, but x x x there were other plain, speedy and adequate remedies in the ordinary course of law?
IV

Whether the Honorable Third Division of the Court of Appeals had jurisdiction to nullify and set aside the Decision of the trial court and dismiss the case?
V

[Whether] receipt by a legal secretary of a summons [is deemed] receipt by a lawyer in contemplation of law?
[6]

Simply stated, the issues boil down to the following: (1) whether the Petition for certiorari before the CA was proper; and (2) whether the trial court acquired jurisdiction over respondents. Since the Petition for certiorari was granted by the CA based on the trial courts alleged lack of jurisdiction over respondents, the second issue shall be discussed ahead of the former. The Courts Ruling The present Petition is partly meritorious. First Issue: Jurisdiction over Defendants Petitioner contends that the trial court validly acquired jurisdiction over the persons of respondents, because the latter never denied that they had actually received the summons through their secretary. Neither did they dispute her competence to receive it. Moreover, he argues that respondents automatically submitted themselves to the jurisdiction of the trial court when they filed, on November 9, 2000, an Omnibus Motion to Dismiss or Admit Answer, a Motion to Dismiss on the grounds of improper venue and litis pendentia, and an Answer with Counterclaim. On the other hand, respondents insist that the substituted service of summons on them was improper. Thus, they allege that the trial court did not have the authority to render its August 23, 2001Decision. We clarify. Service of Summons In civil cases, the trial court acquires jurisdiction over the person of the defendant either by the service of summons or by the latters voluntary appearance and submission to the authority of the former. Where the action

is in personam and the defendant is in the Philippines, the service of summons may be made through personal or substituted service in the manner provided for by Sections 6 and 7 of Rule 14 of the Revised Rules of Court, which read: Section 6. Service in person on defendant. - Whenever practicable, the summons shall be served by handing a copy thereof to the defendant in person, or, if he refuses to receive and sign for it, by tendering it to him. Section 7. Substituted service. - If, for justifiable causes, the defendant cannot be served within a reasonable time as provided in the preceding section, service may be effected (a) by leaving copies of the summons at the defendant's residence with some person of suitable age and discretion then residing therein, or (b) by leaving the copies at defendants office or regular place of business with some competent person in charge thereof. Personal service of summons is preferred over substituted service. Resort to the latter is permitted when the summons cannot be promptly served on the defendant in person and after stringent formal and substantive requirements have been complied with.
[7]

For substituted service of summons to be valid, it is necessary to establish the following circumstances: (a) personal service of summons within a reasonable time was impossible; (b) efforts were exerted to locate the party; and (c) the summons was served upon a person of sufficient age and discretion residing at the partys residence or upon a competent person in charge of the partys office or regular place of business. It is likewise required that the pertinent facts proving these circumstances are stated in the proof of service or officers return.
[8]

In the present case, the Sheriffs Return failed to state that efforts had been made to personally serve the summons on respondents. Neither did the Return indicate that it was impossible to do so within a reasonable time. It simply stated:
[9]

THIS IS TO CERTIFY that on the 30th day of May 2000, copies of the summons together with the complaint and annexes attached thereto were served upon the defendants Pablito M. Castillo and Guia B. Castillo at their place of business at No. 7, 21st Avenue, Cubao, Quezon City thru MS. ESTER FREGINAL, secretary, who is authorized to receive such kind of process. She signed in receipt of the original as evidenced by her signature appearing on the original summons.

That this return is submitted to inform the Honorable x x x Court that the same was duly served.
[10]

Nonetheless, nothing in the records shows that respondents denied actual receipt of the summons through their secretary, Ester Fraginal. Their Urgent Motion to Declare Service of Summons Improper and Legally Defective did not deny receipt thereof; it merely assailed the manner of its service. In fact, they admitted in their Motion that the summons, together with the complaint, was served by the Sheriff on Ester Fraginal, secretary of the defendants at No. 7, 21st Avenue, Cubao, Quezon City on 30 May 2000.
[11] [12]

That the defendants actual receipt of the summons satisfied the requirements of procedural due process had previously been upheld by the Court thus: x x x [T]here is no question that summons was timely issued and received by private respondent. In fact, he never denied actual receipt of such summons but confined himself to the argument that the Sheriff should prove that personal service was first made before resorting to substituted service. This brings to the fore the question of procedural due process. In Montalban v. Maximo (22 SCRA 1077 [1968]) the Court ruled that The constitutional requirement of due process exacts that the service be such as may be reasonably expected to give the notice desired. Once the service provided by the rules reasonably accomplishes that end, the requirement of justice is answered; the traditional notions of fair play are satisfied; due process is served.
[13]

There is likewise no showing that respondents had heretofore pursued the issue of lack of jurisdiction; neither did they reserve their right to invoke it in their subsequent pleadings. If at all, what they avoided forfeiting and waiving - both in their Omnibus Motion ad Cautelam to Admit Motion to Dismiss and Answer with Compulsory Counter-Claim and in their Motion to Dismiss -was their right to invoke the grounds of improper venue and litis pendentia. They argued therein:
[14] [15]

3. x x x. To be sure, the [respondents] have already prepared a finalized draft of their [M]otion to [D]ismiss the case at bar, based on the twin compelling grounds of improper venue and [the] additional fact that there exists a case between the parties involving the same transaction/s covered by the plaintiffs cause of action. x x x; 4. That as things now stand, the [respondents] are confronted with the dilemma of filing their [M]otion to [D]ismiss based on the legal grounds stated above and thus

avoid forfeiture and waiver of these rights as provided for by the Rules and also file the corresponding [M]otion to [A]dmit x x x [A]nswer as mandated by the Omnibus Rule. xxx xxx x x x
[16]

Verily, respondents did not raise in their Motion to Dismiss the issue of jurisdiction over their persons; they raised only improper venue and litis pendentia. Hence, whatever defect there was in the manner of service should be deemed waived.
[17]

Voluntary Appearance and Submission Assuming arguendo that the service of summons was defective, such flaw was cured and respondents are deemed to have submitted themselves to the jurisdiction of the trial court when they filed an Omnibus Motion to Admit the Motion to Dismiss and Answer with Counterclaim, an Answer with Counterclaim, a Motion to Inhibit, and a Motion for Reconsideration and Plea to Reset Pre-trial. The filing of Motions seeking affirmative relief -- to admit answer, for additional time to file answer, for reconsideration of a default judgment, and to lift order of default with motion for reconsideration -- are considered voluntary submission to the jurisdiction of the court. Having invoked the trial courts jurisdiction to secure affirmative relief, respondents cannot -- after failing to obtain the relief prayed for -- repudiate the very same authority they have invoked.
[18] [19]

Second Issue: Propriety of the Petition for Certiorari Petitioner contends that the certiorari Petition filed by respondents before the CA was improper, because other remedies in the ordinary course of law were available to them. Thus, he argues that the CA erred when it took cognizance of and granted the Petition. Well-settled is the rule that certiorari will lie only when a court has acted without or in excess of jurisdiction or with grave abuse of discretion. As a condition for the filing of a petition for certiorari, Section 1 of Rule 65 of the Rules of Court additionally requires that no appeal nor any plain, speedy and adequate remedy in the ordinary course of law must be available. It is
[20] [21]

axiomatic that the availability of the right of appeal precludes recourse to the special civil action for certiorari.
[22]

Here, the trial courts judgment was a final Decision that disposed of the case. It was therefore a fit subject of an appeal. However, instead of appealing the Decision, respondents filed a Petition for certiorari on September 11, 2001.
[23]

Be that as it may, a petition for certiorari may be treated as a petition for review under Rule 45. Such move is in accordance with the liberal spirit pervading the Rules of Court and in the interest of substantial justice, especially (1) if the petition was filed within the reglementary period for filing a petition for review; (2) errors of judgment are averred; and (3) there is sufficient reason to justify the relaxation of the rules. Besides, it is axiomatic that the nature of an action is determined by the allegations of the complaint or petition and the character of the relief sought. The Court explained:
[24] [25] [26] [27]

x x x. It cannot x x x be claimed that this petition is being used as a substitute for appeal after that remedy has been lost through the fault of petitioner. Moreover, stripped of allegations of grave abuse of discretion, the petition actually avers errors of judgment rather than of jurisdiction, which are the subject of a petition for review.
[28]

The present case satisfies all the above requisites. The Petition for certiorari before the CA was filed within the reglementary period of appeal. A review of the records shows that respondents filed their Petition on September 11, 2001 -- four days after they had received the RTC Decision. Verily, there were still 11 days to go before the lapse of the period for filing an appeal. Aside from charging grave abuse of discretion and lack of jurisdiction, they likewise assigned as errors the order and the judgment of default as well as the RTCs allegedly unconscionable and iniquitous award of liquidated damages. We find the latter issue particularly significant, considering that the trial court awarded P1,500,000 as liquidated damages without the benefit of a hearing and out of an obligation impugned by respondents because of petitioners failure to pay. Hence, there are enough reasons to treat the Petition for certiorari as a petition for review.
[29] [30]

In view of the foregoing, we rule that the Petition effectively tolled the finality of the trial court Decision. Consequently, the appellate court had jurisdiction to pass upon the assigned errors. The question that remains is whether it was correct in setting aside the Decision and in dismissing the case.
[31]

Trial Courts Default Orders Erroneous A review of the assailed Decision reveals that the alleged lack of jurisdiction of the trial court over the defendants therein was the reason why the CA nullified the formers default judgment and dismissed the case without prejudice. However, we have ruled earlier that the lower court had acquired jurisdiction over them. Given this fact, the CA erred in dismissing the case; as a consequence, it failed to rule on the propriety of the Order and the judgment of default. To avoid circuitousness and further delay, the Court deems it necessary to now rule on this issue. As much as possible, suits should be decided on the merits and not on technicalities. For this reason, courts have repeatedly been admonished against default orders and judgments that lay more emphasis on procedural niceties at the expense of substantial justice. Not being based upon the merits of the controversy, such issuances may indeed amount to a considerable injustice resulting in serious consequences on the part of the defendant. Thus, it is necessary to examine carefully the grounds upon which these orders and judgments are sought to be set aside.
[32] [33] [34]

Respondents herein were declared in default by the trial court on May 22, 2001, purportedly because of their delay in filing an answer. Its unexpected volte face came six months after it had ruled to admit their Answer on November 16, 2000, as follows: That with respect to the Motion to Admit Answer, this Court is not in favor of terminating this case on the basis of technicality for failure to answer on time, hence, as ruled in the case of Nantz v. Jugo and Cruz, 43 O.G. No. 11, p. 4620, it was held: Lapses in the literal observance of a rule of procedure will be overlooked when they do not involve public policy, when they arose from an honest mistake or unforeseen accident, when they have not prejudiced the adverse party and have not deprived the court ot its authority. Conceived in the best traditions of practical and moral justice and common sense, the Rules of Court frown upon hairsplitting technicalities that do not square with their liberal tendency and with the ends of justice unless something in the nature of the factors just stated intervene. x x x WHEREFORE, x x x in the interest of justice, the Answer of the [respondents] is hereby admitted.
[35]

Indiana Aerospace University v. Commission on Higher Education held that no practical purpose was served in declaring the defendants in default when their Answer had already been filed -- albeit after the 15-day period, but before they were declared as such. Applying that ruling to the present case, we find that respondents were, therefore, imprudently declared in default.
[36]

WHEREFORE, the Petition is hereby GRANTED IN PART, and the Decision of the Court of Appeals MODIFIED. The trial courts Order of Default dated May 22, 2001 and Judgment of Default dated August 23, 2001 are ANNULLED, and the case remanded to the trial court for further proceedings on the merits. No costs

ASIAN CONSTRUCTION AND DEVELOPMENT CORPORATION, petitioner, vs. COURT OF APPEALS and MONARK EQUIPMENT CORPORATION,respondents. DECISION
CALLEJO, SR., J.:

On March 13, 2001, Monark Equipment Corporation (MEC) filed a Complaint for a sum of money with damages against the Asian Construction and Development Corporation (ACDC) with the Regional Trial Court (RTC) of Quezon City. The complaint alleged the following: ACDC leased Caterpillar generator sets and Amida mobile floodlighting systems from MEC during the period of March 13 to July 15, 1998 but failed, despite demands, to pay the rentals therefor in the total amount of P4,313,935.00; from July 14 to August 25, 1998, various equipments from MEC were, likewise, leased by ACDC for the latters power plant in Mauban, Quezon, and that there was still a balance of P456,666.67; and ACDC also purchased and took custody of various equipment parts from MEC for the agreed price of P237,336.20 which, despite demands, ACDC failed to pay.
[1]

MEC prayed that judgment be rendered in its favor, thus: 1. Ordering defendant to pay the plaintiff the total amount of FIVE MILLION SEVENTY-ONE THOUSAND THREE HUNDRED THIRTY-FIVE [PESOS] & 86/100 (P5,071,335.86); 2. Ordering defendant to pay the plaintiff legal interest of 12% per annum on the principal obligations in the total amount of FIVE MILLION SEVENTY-ONE THOUSAND THREE HUNDRED THIRTY-FIVE [PESOS] & 86/100 (P5,071,335.86) computed from the date the obligations became due until fully paid;

3. Ordering defendant to pay attorneys fees in the amount equivalent to 15% of the amount of claim; 4. Ordering defendant to pay all costs of litigation.
[2]

Plaintiff prays for such other reliefs as may be just and equitable under the premises.

ACDC filed a motion to file and admit answer with third-party complaint against Becthel Overseas Corporation (Becthel). In its answer, ACDC admitted its indebtedness to MEC in the amount ofP5,071,335.86 but alleged the following special and affirmative defenses:
5. Defendant has incurred an obligation with plaintiff, in the amount of P5,071,335.86. But third-party defendant fails and refuses to pay its overdue obligation in connection with the leased equipment used by defendant to comply with its contracted services;

6. The equipment covered by the lease were all used in the construction project of Becthel in Mauban, Quezon, and Expo in Pampanga and defendant was not yet paid of its services that resulted to the non-payment of rentals on the leased equipment.[3]

And by way of third-party complaint against Becthel as third-party defendant, ACDC alleged that:
7. 8. Third-party plaintiff repleads the foregoing allegations in the preceding paragraphs as may be material and pertinent hereto; Third-party BECTHEL OVERSEAS CORPORATION (herein called Becthel) is a corporation duly organized and existing under the laws of the United States of America but may be served with summons at Barangay Cagsiay I, Mauban, Quezon 4330, Philippines; Third-party defendant Becthel contracted the services of third-party plaintiff to do construction work at its Mauban, Quezon project using the leased equipment of plaintiff Monark;

9.

10. With the contracted work, third-party plaintiff rented the equipment of the plaintiff Monark; 11. Third-party plaintiff rendered and complied with its contracted works with thirdparty defendant using plaintiffs (Monark) rented equipment. But, third-party defendant BECTHEL did not pay for the services of third-party plaintiff ASIAKONSTRUKT that resulted to the non-payment of plaintiff Monarks claim; 12. Despite repeated demands, third-party defendant failed and refused to pay its overdue obligation to third-party plaintiff ASIAKONSTRUKT, and third-party defendant needs to be impleaded in this case for contribution, indemnity, subrogation or other reliefs to off-set or to pay the amount of money claim of plaintiff Monark on the leased equipment used in the Mauban, Quezon project in the total amount of P456,666.67;

13. By reason thereof, third-party plaintiff was compelled to prosecute its claim against third-party defendant and hired the services of undersigned counsel for an attorneys fees of P500,000.00.[4]

ACDC prayed that judgment be rendered in its favor dismissing the complaint and ordering the third-party defendant (Becthel) to pay P456,666.67 plus interest thereon and attorneys fees.
[5]

MEC opposed the motion of ACDC to file a third-party complaint against Becthel on the ground that the defendant had already admitted its principal obligation to MEC in the amount ofP5,071,335.86; the transaction between it and ACDC, on the one hand, and between ACDC and Becthel, on the other, were independent transactions. Furthermore, the allowance of the third-party complaint would result in undue delays in the disposition of the case.
[6]

MEC then filed a motion for summary judgment, alleging therein that there was no genuine issue as to the obligation of ACDC to MEC in the total amount of P5,071,335.86, the only issue for the trial courts resolution being the amount of attorneys fees and costs of litigation.
[7]

ACDC opposed the motion for summary judgment, alleging that there was a genuine issue with respect to the amount of P5,071,335.86 being claimed by MEC, and that it had a third-party complaint against Becthel in connection with the reliefs sought against it which had to be litigated.
[8]

In its reply, MEC alleged that the demand of ACDC in its special and affirmative defenses partook of the nature of a negative pregnant, and that there was a need for a hearing on its claim for damages. On August 2, 2001, the trial court issued a Resolution denying the motion of ACDC for leave to file a third-party complaint and granting the motion of MEC, which the trial court considered as a motion for a judgment on the pleadings. The fallo of the resolution reads: ACCORDINGLY, this Court finds defendant Asian Construction and Development Corporation liable to pay plaintiff Monark Equipment Corporation and is hereby ordered to pay plaintiff the amount of FIVE MILLION SEVENTY-ONE THOUSAND AND THREE HUNDRED THIRTY-FIVE & 86/100 PESOS (P5,071,335.86) plus 12% interest from the filing of the complaint until fully paid. SO ORDERED.
[9]

ACDC appealed the resolution to the Court of Appeals (CA), alleging that

I. THE LOWER COURT ERRED IN DENYING THE MOTION TO FILE AND ADMIT ANSWER WITH THIRD-PARTY COMPLAINT; II. THE LOWER COURT ERRED IN GRANTING THE MOTION FOR SUMMARY JUDGMENT; III. THE LOWER COURT ERRED WHEN IT DENIED THE THIRD-PARTY COMPLAINT AND ORDERED DEFENDANT TO PAY THE AMOUNT OF P5,071,335.86 PLUS INTEREST OF 12% PER ANNUM.[10]

On July 18, 2001, the CA rendered judgment dismissing the appeal and affirming the assailed decision. The appellate court ruled that since MEC had prayed for judgment on the pleadings, it thereby waived its claim for damages other than the amount of P5,071,335.86; hence, there was no longer a genuine issue to be resolved by the court which necessitated trial. The appellate court sustained the disallowance of the third-party complaint of ACDC against Becthel on the ground that the transaction between the said parties did not arise out of the same transaction on which MECs claim was based. Its motion for reconsideration of the decision having been denied, ACDC, now the petitioner, filed the present petition for review on certiorari, and raises the following issues:
I. WHETHER OR NOT A THIRD-PARTY COMPLAINT IS PROPER; AND II. WHETHER OR NOT JUDGMENT ON THE PLEADINGS IS PROPER.[11]

Citing the rulings of this Court in Allied Banking Corporation v. Court of Appeals and British Airways v. Court of Appeals, the petitioner avers that the CA erred in ruling that in denying its motion for leave to file a third-party complaint, the RTC acted in accordance with the Rules of Court and case law. The petitioner maintains that it raised genuine issues in its answer; hence, it was improper for the trial court to render judgment on the pleadings:
[12] [13]

With due respect, the judgment on the pleadings affirmed by the Court of Appeals is not, likewise, proper considering that the Answer with Third-Party Complaint, although it admitted the obligation to respondent, tendered an issue of whether the respondents claim is connected with the third-party claim. As alleged in the Answer with Third-Party Complaint, it is admitted then by respondent, for purposes of judgment on the pleadings, that failure to pay respondent was in connection of Becthel Overseas Corporations failure to pay its obligation to petitioner and that the equipment leased was used in connection with the Becthel Overseas Corporation project.

This tendered issue could not just be disregarded in the light of the third-party complaint filed by herein petitioner and third-party plaintiff which, as argued in the first discussion/argument, is proper and should have been given due course.
[14]

The petition is denied for lack of merit. Section 11, Rule 6 of the Rules of Court provides: Sec. 11. Third (fourth, etc.)-party complaint. A third (fourth, etc.) party complaint is a claim that a defending party may, with leave of court, file against a person not a party to the action, called the third (fourth, etc.) party defendant, for contribution, indemnity, subrogation or any other relief, in respect of his opponents claim. Furthermore, Section 1, Rule 34 of the Rules of Court provides that the Court may render judgment on the pleadings, as follows: Section 1. Judgment on the pleadings. Where an answer fails to tender an issue, or, otherwise, admits the material allegations of the adverse partys pleading, the court may, on motion of that party, direct judgment on such pleading. However, in actions for declaration of nullity or annulment of marriage or for legal separation, the material facts alleged in the complaint shall always be proved. The purpose of Section 11, Rule 6 of the Rules of Court is to permit a defendant to assert an independent claim against a third-party which he, otherwise, would assert in another action, thus preventing multiplicity of suits. All the rights of the parties concerned would then be adjudicated in one proceeding. This is a rule of procedure and does not create a substantial right. Neither does it abridge, enlarge, or nullify the substantial rights of any litigant. This right to file a third-party complaint against a third-party rests in the discretion of the trial court. The third-party complaint is actually independent of, separate and distinct from the plaintiffs complaint, such that were it not for the rule, it would have to be filed separately from the original complaint.
[15] [16]

A prerequisite to the exercise of such right is that some substantive basis for a third-party claim be found to exist, whether the basis be one of indemnity, subrogation, contribution or other substantive right. The bringing of a third-party defendant is proper if he would be liable to the plaintiff or to the defendant or both for all or part of the plaintiffs claim against the original defendant, although the third-party defendants liability arises out of another transaction. The defendant may implead another as third-party defendant (a) on an allegation of liability of the latter to the defendant for contribution, indemnity, subrogation or any other relief; (b) on the ground of direct liability of
[17] [18]

the third-party defendant to the plaintiff; or (c) the liability of the third-party defendant to both the plaintiff and the defendant. There must be a causal connection between the claim of the plaintiff in his complaint and a claim for contribution, indemnity or other relief of the defendant against the third-party defendant. In Capayas v. Court of First Instance, the Court made out the following tests: (1) whether it arises out of the same transaction on which the plaintiffs claim is based; or whether the third-party claim, although arising out of another or different contract or transaction, is connected with the plaintiffs claim; (2) whether the third-party defendant would be liable to the plaintiff or to the defendant for all or part of the plaintiffs claim against the original defendant, although the third-party defendants liability arises out of another transaction; and (3) whether the third-party defendant may assert any defenses which the third-party plaintiff has or may have to the plaintiffs claim.
[19] [20]

The third-party complaint does not have to show with certainty that there will be recovery against the third-party defendant, and it is sufficient that pleadings show possibility of recovery. In determining the sufficiency of the third-party complaint, the allegations in the original complaint and the thirdparty complaint must be examined. A third-party complaint must allege facts which prima facie show that the defendant is entitled to contribution, indemnity, subrogation or other relief from the third-party defendant.
[21] [22] [23]

It bears stressing that common liability is the very essence for contribution. Contribution is a payment made by each, or by any of several having a common liability of his share in the damage suffered or in the money necessarily paid by one of the parties in behalf of the other or others. The rule on common liability is fundamental in the action for contribution. The test to determine whether the claim for indemnity in a third-party complaint is, whether it arises out of the same transaction on which the plaintiffs claim is based, or the third-party plaintiffs claim, although arising out of another or different contract or transaction, is connected with the plaintiffs claim.
[24] [25] [26]

In this case, the claims of the respondent, as plaintiff in the RTC, against the petitioner as defendant therein, arose out of the contracts of lease and sale; such transactions are different and separate from those between Becthel and the petitioner as third-party plaintiff for the construction of the latters project in Mauban, Quezon, where the equipment leased from the respondent was used by the petitioner. The controversy between the respondent and the petitioner, on one hand, and that between the petitioner and Becthel, on the other, are thus entirely distinct from each other. There is no showing in the proposed third-party complaint that the respondent knew or approved the use of the leased equipment by the petitioner for the said project in Quezon. Becthel cannot invoke any defense the petitioner had or may have

against the claims of the respondent in its complaint, because the petitioner admitted its liabilities to the respondent for the amount of P5,075,335.86. The barefaced fact that the petitioner used the equipment it leased from the respondent in connection with its project with Becthel does not provide a substantive basis for the filing of a third-party complaint against the latter. There is no causal connection between the claim of the respondent for the rental and the balance of the purchase price of the equipment and parts sold and leased to the petitioner, and the failure of Becthel to pay the balance of its account to the petitioner after the completion of the project in Quezon.
[27]

We note that in its third-party complaint, the petitioner alleged that Becthel should be ordered to pay the balance of its account of P456,666.67, so that the petitioner could pay the same to the respondent. However, contrary to its earlier plea for the admission of its third-party complaint against Becthel, the petitioner also sought the dismissal of the respondents complaint. The amount ofP456,666.67 it sought to collect from Becthel would not be remitted to the respondent after all. The rulings of this Court in Allied Banking Corporation and British Airways are not applicable in this case since the factual backdrops in the said cases are different. In Allied Banking Corporation, Joselito Yujuico obtained a loan from General Bank and Trust Company. The Central Bank of the Philippines ordered the liquidation of the Bank. In a Memorandum Agreement between the liquidation of the Bank and Allied Banking Corporation, the latter acquired the receivables from Yujuico. Allied Banking Corporation then sued Yujuico for the collection of his loan, and the latter filed a third-party complaint against the Central Bank, alleging that by reason of its tortious interference with the affairs of the General Bank and Trust Company, he was prevented from performing his obligation under the loan. This Court allowed the third-party complaint based on the claim of the defendant therein, thus: In the words of private respondent, he [s]eeks to transfer liability for the default imputed against him by the petitioner to the proposed third-party defendants because of their tortious acts which prevented him from performing his obligations. Thus, if at the outset the issue appeared to be a simple makers liability on a promissory note, it became complex by the rendition of the aforestated decision.
[28]

In British Airways, the Court allowed the third-party complaint of British Airways against its agent, the Philippine Airlines, on the plaintiffs complaint regarding his luggage, considering that a contract of carriage was involved. The Court ruled, thus:

Undeniably, for the loss of his luggage, Mahtani is entitled to damages from BA, in view of their contract of carriage. Yet, BA adamantly disclaimed its liability and instead imputed it to PAL which the latter naturally denies. In other words, BA and PAL are blaming each other for the incident. In resolving this issue, it is worth observing that the contract of air transportation was exclusively between Mahtani and BA, the latter merely endorsing the Manila to Hongkong leg of the formers journey to PAL, as its subcontractor or agent. In fact, the fourth paragraph of the Conditions of Contracts of the ticket issued by BA to Mahtani confirms that the contract was one of continuous air transportation from Manila to Bombay. 4. xxx carriage to be performed hereunder by several successive carriers is regarded as a single operation. Prescinding from the above discussion, it is undisputed that PAL, in transporting Mahtani from Manila to Hongkong acted as the agent of BA. Parenthetically, the Court of Appeals should have been cognizant of the well-settled rule that an agent is also responsible for any negligence in the performance of its function and is liable for damages which the principal may suffer by reason of its negligent act. Hence, the Court of Appeals erred when it opined that BA, being the principal, had no cause of action against PAL, its agent or sub-contractor. Also, it is worth mentioning that both BA and PAL are members of the International Air Transport Association (IATA), wherein member airlines are regarded as agents of each other in the issuance of the tickets and other matters pertaining to their relationship. Therefore, in the instant case, the contractual relationship between BA and PAL is one of agency, the former being the principal, since it was the one which issued the confirmed ticket, and the latter the agent.
[29]

It goes without saying that the denial of the petitioners motion with leave to file a third-party complaint against Becthel is without prejudice to its right to file a separate complaint against the latter. Considering that the petitioner admitted its liability for the principal claim of the respondent in its Answer with Third-Party Complaint, the trial court did not err in rendering judgment on the pleadings against it. IN LIGHT OF ALL THE FOREGOING, the petition is DENIED for lack of merit. Costs against the petitioner.

BANCO DE ORO VS. TANSIPEK

DECISION

CHICO-NAZARIO, J.: Before Us is a Petition for Review on Certiorari assailing the Decision[1] of the Court of Appeals in CA-G.R. CV No. 69130 dated 18 August 2006 and the Resolution of the same court dated 9 January 2008. The facts of the case are as follows: J. O. Construction, Inc. (JOCI), a domestic corporation engaged in the construction business in Cebu City, filed a complaint against Philippine Commercial and Industrial Bank (PCIB) in the Regional Trial Court (RTC) of Makati City docketed as Civil Case No. 97-508. The Complaint alleges that JOCI entered into a contract with Duty Free Philippines, Inc. for the construction of a Duty Free Shop in Mandaue City. As actual construction went on, progress billings were made. Payments were received by JOCI directly or through herein respondent John Tansipek, its authorized collector. Payments received by respondent Tansipek were initially remitted to JOCI. However, payment through PNB Check No. 0000302572 in the amount of P4,050,136.51 was not turned over to JOCI. Instead, respondent Tansipek endorsed said check and deposited the same to his account in PCIB, Wilson Branch, Wilson Street, Greenhills, San Juan, Metro Manila. PCIB allowed the said deposit, despite the fact that the check was crossed for the deposit to payees account only, and despite the alleged lack of authority of respondent Tansipek to endorse said check. PCIB refused to pay JOCI the full amount of the check despite demands made by the latter. JOCI prayed for the payment of the amount of the check (P4,050,136.51), P500,000.00 in attorneys fees, P100,000.00 in expenses, P50,000.00 for costs of suit, and P500,000.00 in exemplary damages. PCIB filed a Motion to Dismiss the Complaint on the grounds that (1) an indispensable party was not impleaded, and (2) therein plaintiff JOCI had no cause of action against PCIB. The RTC denied PCIBs Motion to Dismiss. PCIB filed its answer alleging as defenses that (1) JOCI had clothed Tansipek with authority to act as its agent, and was therefore estopped from

denying the same; (2) JOCI had no cause of action against PCIB ; (3) failure to implead Tansipek rendered the proceedings taken after the filing of the complaint void; (4) PCIBs act of accepting the deposit was fully justified by established bank practices; (5) JOCIs claim was barred by laches; and (6) the damages alleged by JOCI were hypothetical and speculative. PCIB incorporated in said Answer its counterclaims for exemplary damages in the amount of P400,000.00, and litigation expenses and attorneys fees in the amount of P400,000.00. PCIB likewise moved for leave for the court to admit the formers third party complaint against respondent Tansipek. The third-party complaint alleged that respondent Tansipek was a depositor at its Wilson Branch, San Juan, Metro Manila, where he maintained Account No. 5703-03538-3 in his name and/or that of his wife, Anita. Respondent Tansipek had presented to PCIB a signed copy of the Minutes of the meeting of the Board of Directors of JOCI stating the resolution that
Checks payable to J.O. Construction, Inc. may be deposited to Account No. 570303538-3 under the name of John and/or Anita Tansipek, maintained at PCIB, Wilson Branch.[2]

Respondent Tansipek had also presented a copy of the Articles of Incorporation of JOCI showing that he and his wife, Anita, were incorporators of JOCI, with Anita as Treasurer. In the third-party complaint, PCIB prayed for subrogation and payment of attorneys fees in the sum of P400,000.00. PCIB filed a Motion to Admit Amended Third-Party Complaint. The amendment consisted in the correction of the caption, so that PCIB appeared as Third-Party Plaintiff and Tansipek as Third-Party Defendant. Upon Motion, respondent Tansipek was granted time to file his Answer to the Third-Party Complaint. He was, however, declared in default for failure to do so. The Motion to Reconsider the Default Order was denied. Respondent Tansipek filed a Petition for Certiorari with the Court of Appeals assailing the Default Order and the denial of the Motion for Reconsideration. The Petition was docketed as CA-G.R. SP No. 47727. On 29 May 1998, the Court of Appeals dismissed the Petition for failure to attach the assailed Orders. On 28 September 1998, the Court of Appeals denied respondent Tansipeks Motion for Reconsideration for having been filed out of time.

Pre-trial on the main case ensued, wherein JOCI and PCIB limited the issues as follows:
1. Whether or not the defendant bank erred in allowing the deposit of Check No. 0302572 (Exh. A) in the amount of P4,050,136.51 drawn in favor of plaintiff JO Construction, Inc. in John Tansipeks account when such check was crossed and clearly marked for payees account only. 2. Whether the alleged board resolution and the articles of Incorporation are genuine and a valid defense against plaintiffs effort to collect the amount of P4,050,136.51.

On 14 July 2000, the RTC promulgated its Decision in Civil Case No. 97508, the dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered in favor of the plaintiff [JOCI] and against the defendant bank [PCIB] ordering the latter to pay to the plaintiff the sum of P4,050,136.51 with interest at the rate of twelve percent (12%) per annum from the filing of this complaint until fully paid plus costs of suit. The other damages claimed by the plaintiff are denied for being speculative. On the third party complaint, third-party defendant John Tansipek is ordered to pay the third-party plaintiff Philippine Commercial and Industrial Bank all amounts said defendant/third-party plaintiff shall have to pay to the plaintiff on account of this case.[3]

Respondent Tansipek appealed the Decision to the Court of Appeals. The case was docketed as CA-G.R. CV No. 69130. Respondent Tansipek assigned the following alleged errors:
a) The trial courts decision upholding the order of default and the consequent ex-parte reception of appellees evidence was anchored on erroneous and baseless conclusion that: 1) The original reglementary period to plead has already expired. 2) The ten day extended period to answer has likewise expired. 3) There is no need to pass upon a second motion to plead much less, any need for a new motion for extended period to plead.

b) The trial court erred in utterly depriving the appellant of his day in court and in depriving constitutional, substantive and procedural due process premised solely on pure and simple technicality which never existed and are imaginary and illusory. c) The trial court erred in ordering the third-party defendant-appellant John Tansipek to pay the third party plaintiff-appellee PCIBank all amounts said bank shall have to pay to the plaintiff-appellee by way of subrogation since appellant if allowed to litigate in the trial court, would have obtained a favorable judgment as he has good, valid and meritorious defenses.[4]

On 18 August 2006, the Court of Appeals issued the assailed Decision finding that it was an error for the trial court to have acted on PCI Bs motion to declare respondent Tansipek in default. The Court of Appeals thus remanded the case to the RTC for further proceedings, to wit:
WHEREFORE, premises considered, the appeal is GRANTED. The decision relative to the third party complaint is REVERSED and SET ASIDE. The case is ordered REMANDED to the trial court for further proceedings on the third party complaint.[5]

The Court of Appeals denied the Motion for Reconsideration of PCIB in a Resolution dated 9 January 2008. Petitioner Banco de Oro-EPCI, Inc., as successor-in-interest to PCIB, filed the instant Petition for Review on Certiorari, assailing the above Decision and Resolution of the Court of Appeals, and laying down a lone issue for this Courts consideration:
WHETHER OR NOT THE COURT OF APPEALS CAN REVERSE ITS DECISION HANDED DOWN EIGHT YEARS BEFORE.[6]

To recapitulate, upon being declared in default, respondent Tansipek filed a Motion for Reconsideration of the Default Order. Upon denial thereof, Tansipek filed a Petition forCertiorari with the Court of Appeals, which was dismissed for failure to attach the assailed Orders. Respondent Tansipeks Motion for Reconsideration with the Court of Appeals was denied for having been filed out of time. Respondent Tansipek did not appeal said denial to this Court.

Respondent Tansipeks remedy against the Order of Default was erroneous from the very beginning. Respondent Tansipek should have filed a Motion to Lift Order of Default, and not a Motion for Reconsideration, pursuant to Section 3(b), Rule 9 of the Rules of Court:
(b) Relief from order of default.A party declared in default may at any time after notice thereof and before judgment file a motion under oath to set aside the order of default upon proper showing that his failure to answer was due to fraud, accident, mistake or excusable negligence and that he has a meritorious defense. In such case, the order of default may be set aside on such terms and conditions as the judge may impose in the interest of justice.

A Motion to Lift Order of Default is different from an ordinary motion in that the Motion should be verified; and must show fraud, accident, mistake or excusable neglect, and meritorious defenses.[7] The allegations of (1) fraud, accident, mistake or excusable neglect, and (2) of meritorious defenses must concur.[8] Assuming for the sake of argument, however, that respondent Tansipeks Motion for Reconsideration may be treated as a Motion to Lift Order of Default, his Petition forCertiorari on the denial thereof has already been dismissed with finality by the Court of Appeals. Respondent Tansipek did not appeal said ruling of the Court of Appeals to this Court. The dismissal of the Petition for Certiorari assailing the denial of respondent Tansipeks Motion constitutes a bar to the retrial of the same issue of default under the doctrine of the law of the case. In People v. Pinuila,[9] we held that:
Law of the case has been defined as the opinion delivered on a former appeal. More specifically, it means that whatever is once irrevocably established as the controlling legal rule of decision between the same parties in the same case continues to be the law of the case, whether correct on general principles or not, so long as the facts on which such decision was predicated continue to be the facts of the case before the court. It may be stated as a rule of general application that, where the evidence on a second or succeeding appeal is substantially the same as that on the first or preceding appeal, all matters, questions, points, or issues adjudicated on the prior appeal are the law of the case on all subsequent appeals and will not be considered or readjudicated therein.

xxxx As a general rule a decision on a prior appeal of the same case is held to be the law of the case whether that decision is right or wrong, the remedy of the party deeming himself aggrieved being to seek a rehearing. Questions necessarily involved in the decision on a former appeal will be regarded as the law of the case on a subsequent appeal, although the questions are not expressly treated in the opinion of the court, as the presumption is that all the facts in the case bearing on the point decided have received due consideration whether all or none of them are mentioned in the opinion. (Emphasis supplied.)

The issue of the propriety of the Order of Default had already been adjudicated in Tansipeks Petition for Certiorari with the Court of Appeals. As such, this issue cannot be readjudicated in Tansipeks appeal of the Decision of the RTC on the main case. Once a decision attains finality, it becomes the law of the case, whether or not said decision is erroneous.[10] Having been rendered by a court of competent jurisdiction acting within its authority, the judgment may no longer be altered even at the risk of legal infirmities and errors it may contain.[11] Respondent Tansipek counters that the doctrine of the law of the case is not applicable, inasmuch as a Petition for Certiorari is not an appeal. Respondent Tansipek further argues that the Doctrine of the Law of the Case applies only when the appellate court renders a decision on the merits, and not when such appeal was denied due to technicalities. We are not persuaded. In Buenviaje v. Court of Appeals,[12] therein respondent Cottonway Marketing Corporation filed a Petition for Certiorari with this Court assailing the Decision of the National Labor Relations Commission (NLRC) ordering, inter alia, the reinstatement of therein petitioners and the payment of backwages from the time their salaries were withheld up to the time of actual reinstatement. The Petition for Certiorari was dismissed by this Court. The subsequent Motion for Reconsideration was likewise denied. However, the Labor Arbiter then issued an Order limiting the amount of backwages that was due to petitioners. The NLRC reversed this Order, but the Court of Appeals reinstated the same. This Court, applying the Doctrine of the Law of the Case, held:
The decision of the NLRC dated March 26, 1996 has become final and executory upon the dismissal by this Court of Cottonways petition

for certiorari assailing said decision and the denial of its motion for reconsideration. Said judgment may no longer be disturbed or modified by any court or tribunal. It is a fundamental rule that when a judgment becomes final and executory, it becomes immutable and unalterable, and any amendment or alteration which substantially affects a final and executory judgment is void, including the entire proceedings held for that purpose. Once a judgment becomes final and executory, the prevailing party can have it executed as a matter of right, and the issuance of a writ of execution becomes a ministerial duty of the court. A decision that has attained finality becomes the law of the case regardless of any claim that it is erroneous. The writ of execution must therefore conform to the judgment to be executed and adhere strictly to the very essential particulars.[13] (Emphases supplied.)

Furthermore, there is no substantial distinction between an appeal and a Petition for Certiorari when it comes to the application of the Doctrine of the Law of the Case. The doctrine is founded on the policy of ending litigation. The doctrine is necessary to enable the appellate court to perform its duties satisfactorily and efficiently, which would be impossible if a question once considered and decided by it were to be litigated anew in the same case upon any and every subsequent appeal.[14] Likewise, to say that the Doctrine of the Law the Case applies only when the appellate court renders a decision on the merits would be putting a premium on the fault or negligence of the party losing the previous appeal. In the case at bar, respondent Tansipek would be awarded (1) for his failure to attach the necessary requirements to his Petition for Certiorariwith the Court of Appeals; (2) for his failure to file a Motion for Reconsideration in time; and (3) for his failure to appeal the Decision of the Court of Appeals with this Court. The absurdity of such a situation is clearly apparent. It is important to note that a party declared in default respondent Tansipek in this case is not barred from appealing from the judgment on the main case, whether or not he had previously filed a Motion to Set Aside Order of Default, and regardless of the result of the latter and the appeals therefrom. However, the appeal should be based on the Decisions being contrary to law or the evidence already presented, and not on the alleged invalidity of the default order.[15] WHEREFORE, the Decision of the Court of Appeals in CA-G.R. CV No. 69130 dated 18 August 2006 and the Resolution of the same court dated 9 January 2008 are herebyREVERSED and SET ASIDE. The Decision of

the Regional Trial Court of Makati City in Civil Case No. 97-508 dated 14 July 2000 is hereby REINSTATED. No pronouncement as to costs.
REPUBLIC OF THE PHILIPPINES, petitioner, vs. HONORABLE SANDIGANBAYAN (SPECIAL FIRST DIVISION), FERDINAND E. MARCOS (REPRESENTED BY HIS ESTATE/HEIRS: IMELDA R. MARCOS, MARIA IMELDA [IMEE] MARCOS-MANOTOC, FERDINAND R. MARCOS, JR. AND IRENE MARCOS-ARANETA) AND IMELDA ROMUALDEZ MARCOS, respondents. CORONA, J.: This is a petition for certiorari under Rule 65 of the Rules of Court seeking to (1) set aside the Resolution dated January 31, 2002 issued by the Special First Division of the Sandiganbayan in Civil Case No. 0141 entitledRepublic of the Philippines vs. Ferdinand E. Marcos, et. al., and (2) reinstate its earlier decision dated September 19, 2000 which forfeited in favor of petitioner Republic of the Philippines (Republic) the amount held in escrow in the Philippine National Bank (PNB) in the aggregate amount of US$658,175,373.60 as of January 31, 2002. BACKGROUND OF THE CASE On December 17, 1991, petitioner Republic, through the Presidential Commission on Good Government (PCGG), represented by the Office of the Solicitor General (OSG), filed a petition for forfeiture before the Sandiganbayan, docketed as Civil Case No. 0141 entitled Republic of the Philippines vs. Ferdinand E. Marcos, represented by his Estate/Heirs and Imelda R. Marcos, pursuant to RA 13791 in relation to Executive Order Nos. 1,2 2,3 144 and 14-A.5 In said case, petitioner sought the declaration of the aggregate amount of US$356 million (now estimated to be more than US$658 million inclusive of interest) deposited in escrow in the PNB, as ill-gotten wealth. The funds were previously held by the following five account groups, using various foreign foundations in certain Swiss banks: (1) Azio-Verso-Vibur Foundation accounts; (2) Xandy-Wintrop: Charis-Scolari-Valamo-Spinus- Avertina Foundation accounts; (3) Trinidad-Rayby-Palmy Foundation accounts; (4) Rosalys-Aguamina Foundation accounts and (5) Maler Foundation accounts. In addition, the petition sought the forfeiture of US$25 million and US$5 million in treasury notes which exceeded the Marcos couple's salaries, other lawful income as well as income from legitimately acquired property. The treasury notes are frozen at the Central Bank of the Philippines, now Bangko Sentral ng Pilipinas, by virtue of the freeze order issued by the PCGG. On October 18, 1993, respondents Imelda R. Marcos, Maria Imelda M. Manotoc, Irene M. Araneta and Ferdinand R. Marcos, Jr. filed their answer.

Before the case was set for pre-trial, a General Agreement and the Supplemental Agreements6 dated December 28, 1993 were executed by the Marcos children and then PCGG Chairman Magtanggol Gunigundo for a global settlement of the assets of the Marcos family. Subsequently, respondent Marcos children filed a motion dated December 7, 1995 for the approval of said agreements and for the enforcement thereof. The General Agreement/Supplemental Agreements sought to identify, collate, cause the inventory of and distribute all assets presumed to be owned by the Marcos family under the conditions contained therein. The aforementioned General Agreement specified in one of its premises or "whereas clauses" the fact that petitioner "obtained a judgment from the Swiss Federal Tribunal on December 21, 1990, that the Three Hundred Fifty-six Million U.S. dollars (US$356 million) belongs in principle to the Republic of the Philippines provided certain conditionalities are met x x x." The said decision of the Swiss Federal Supreme Court affirmed the decision of Zurich District Attorney Peter Consandey, granting petitioner's request for legal assistance.7 Consandey declared the various deposits in the name of the enumerated foundations to be of illegal provenance and ordered that they be frozen to await the final verdict in favor of the parties entitled to restitution. Hearings were conducted by the Sandiganbayan on the motion to approve the General/Supplemental Agreements. Respondent Ferdinand, Jr. was presented as witness for the purpose of establishing the partial implementation of said agreements. On October 18, 1996, petitioner filed a motion for summary judgment and/or judgment on the pleadings. Respondent Mrs. Marcos filed her opposition thereto which was later adopted by respondents Mrs. Manotoc, Mrs. Araneta and Ferdinand, Jr. In its resolution dated November 20, 1997, the Sandiganbayan denied petitioner's motion for summary judgment and/or judgment on the pleadings on the ground that the motion to approve the compromise agreement "(took) precedence over the motion for summary judgment." Respondent Mrs. Marcos filed a manifestation on May 26, 1998 claiming she was not a party to the motion for approval of the Compromise Agreement and that she owned 90% of the funds with the remaining 10% belonging to the Marcos estate. Meanwhile, on August 10, 1995, petitioner filed with the District Attorney in Zurich, Switzerland, an additional request for the immediate transfer of the deposits to an escrow account in the PNB. The request was granted. On appeal by the Marcoses, the Swiss Federal Supreme Court, in a decision dated December 10, 1997, upheld the ruling of the District Attorney of Zurich granting the request for the transfer of the funds. In 1998, the funds were remitted to the Philippines in escrow. Subsequently, respondent Marcos children moved that the funds be placed in custodia legis because the deposit in escrow in the PNB was allegedly in danger of dissipation by petitioner. The Sandiganbayan, in its resolution dated September 8, 1998, granted the motion. After the pre-trial and the issuance of the pre-trial order and supplemental pre-trial order dated October 28, 1999 and January 21, 2000, respectively, the case was set for trial. After several resettings, petitioner, on March 10, 2000, filed another motion for summary judgment pertaining to the forfeiture of the US$356 million, based on the following grounds: I THE ESSENTIAL FACTS WHICH WARRANT THE FORFEITURE OF THE FUNDS SUBJECT OF THE PETITION UNDER R.A. NO. 1379 ARE ADMITTED BY

RESPONDENTS IN THEIR PLEADINGS AND OTHER SUBMISSIONS MADE IN THE COURSE OF THE PROCEEDING. II RESPONDENTS' ADMISSION MADE DURING THE PRE-TRIAL THAT THEY DO NOT HAVE ANY INTEREST OR OWNERSHIP OVER THE FUNDS SUBJECT OF THE ACTION FOR FORFEITURE TENDERS NO GENUINE ISSUE OR CONTROVERSY AS TO ANY MATERIAL FACT IN THE PRESENT ACTION, THUS WARRANTING THE RENDITION OF SUMMARY JUDGMENT.8 Petitioner contended that, after the pre-trial conference, certain facts were established, warranting a summary judgment on the funds sought to be forfeited. Respondent Mrs. Marcos filed her opposition to the petitioner's motion for summary judgment, which opposition was later adopted by her co-respondents Mrs. Manotoc, Mrs. Araneta and Ferdinand, Jr. On March 24, 2000, a hearing on the motion for summary judgment was conducted. In a decision9 dated September 19, 2000, the Sandiganbayan granted petitioner's motion for summary judgment: CONCLUSION There is no issue of fact which calls for the presentation of evidence. The Motion for Summary Judgment is hereby granted. The Swiss deposits which were transmitted to and now held in escrow at the PNB are deemed unlawfully acquired as ill-gotten wealth. DISPOSITION WHEREFORE, judgment is hereby rendered in favor of the Republic of the Philippines and against the respondents, declaring the Swiss deposits which were transferred to and now deposited in escrow at the Philippine National Bank in the total aggregate value equivalent to US$627,608,544.95 as of August 31, 2000 together with the increments thereof forfeited in favor of the State.10 Respondent Mrs. Marcos filed a motion for reconsideration dated September 26, 2000. Likewise, Mrs. Manotoc and Ferdinand, Jr. filed their own motion for reconsideration dated October 5, 2000. Mrs. Araneta filed a manifestation dated October 4, 2000 adopting the motion for reconsideration of Mrs. Marcos, Mrs. Manotoc and Ferdinand, Jr. Subsequently, petitioner filed its opposition thereto. In a resolution11 dated January 31, 2002, the Sandiganbayan reversed its September 19, 2000 decision, thus denying petitioner's motion for summary judgment: CONCLUSION

In sum, the evidence offered for summary judgment of the case did not prove that the money in the Swiss Banks belonged to the Marcos spouses because no legal proof exists in the record as to the ownership by the Marcoses of the funds in escrow from the Swiss Banks. The basis for the forfeiture in favor of the government cannot be deemed to have been established and our judgment thereon, perforce, must also have been without basis. WHEREFORE, the decision of this Court dated September 19, 2000 is reconsidered and set aside, and this case is now being set for further proceedings.12 Hence, the instant petition. In filing the same, petitioner argues that the Sandiganbayan, in reversing its September 19, 2000 decision, committed grave abuse of discretion amounting to lack or excess of jurisdiction considering that -I PETITIONER WAS ABLE TO PROVE ITS CASE IN ACCORDANCE WITH THE REQUISITES OF SECTIONS 2 AND 3 OF R.A. NO. 1379: A. PRIVATE RESPONDENTS CATEGORICALLY ADMITTED NOT ONLY THE PERSONAL CIRCUMSTANCES OF FERDINAND E. MARCOS AND IMELDA R. MARCOS AS PUBLIC OFFICIALS BUT ALSO THE EXTENT OF THEIR SALARIES AS SUCH PUBLIC OFFICIALS, WHO UNDER THE CONSTITUTION, WERE PROHIBITED FROM ENGAGING IN THE MANAGEMENT OF FOUNDATIONS. B. PRIVATE RESPONDENTS ALSO ADMITTED THE EXISTENCE OF THE SWISS DEPOSITS AND THEIR OWNERSHIP THEREOF: 1. ADMISSIONS IN PRIVATE RESPONDENTS' ANSWER; 2. ADMISSION IN THE GENERAL / SUPPLEMENTAL AGREEMENTS THEY SIGNED AND SOUGHT TO IMPLEMENT; 3. ADMISSION IN A MANIFESTATION OF PRIVATE RESPONDENT IMELDA R. MARCOS AND IN THE MOTION TO PLACE THE RES IN CUSTODIA LEGIS; AND 4. ADMISSION IN THE UNDERTAKING TO PAY THE HUMAN RIGHTS VICTIMS. C. PETITIONER HAS PROVED THE EXTENT OF THE LEGITIMATE INCOME OF FERDINAND E. MARCOS AND IMELDA R. MARCOS AS PUBLIC OFFICIALS. D. PETITIONER HAS ESTABLISHED A PRIMA FACIE PRESUMPTION OF UNLAWFULLY ACQUIRED WEALTH. II SUMMARY JUDGMENT IS PROPER SINCE PRIVATE RESPONDENTS HAVE NOT RAISED ANY GENUINE ISSUE OF FACT CONSIDERING THAT:

A. PRIVATE RESPONDENTS' DEFENSE THAT SWISS DEPOSITS WERE LAWFULLY ACQUIRED DOES NOT ONLY FAIL TO TENDER AN ISSUE BUT IS CLEARLY A SHAM; AND B. IN SUBSEQUENTLY DISCLAIMING OWNERSHIP OF THE SWISS DEPOSITS, PRIVATE RESPONDENTS ABANDONED THEIR SHAM DEFENSE OF LEGITIMATE ACQUISITION, AND THIS FURTHER JUSTIFIED THE RENDITION OF A SUMMARY JUDGMENT. III THE FOREIGN FOUNDATIONS NEED NOT BE IMPLEADED. IV THE HONORABLE PRESIDING JUSTICE COMMITTED GRAVE ABUSE OF DISCRETION IN REVERSING HIMSELF ON THE GROUND THAT ORIGINAL COPIES OF THE AUTHENTICATED SWISS DECISIONS AND THEIR "AUTHENTICATED TRANSLATIONS" HAVE NOT BEEN SUBMITTED TO THE COURT, WHEN EARLIER THE SANDIGANBAYAN HAS QUOTED EXTENSIVELY A PORTION OF THE TRANSLATION OF ONE OF THESE SWISS DECISIONS IN HIS "PONENCIA" DATED JULY 29, 1999 WHEN IT DENIED THE MOTION TO RELEASE ONE HUNDRED FIFTY MILLION US DOLLARS ($150,000,000.00) TO THE HUMAN RIGHTS VICTIMS. V PRIVATE RESPONDENTS ARE DEEMED TO HAVE WAIVED THEIR OBJECTION TO THE AUTHENTICITY OF THE SWISS FEDERAL SUPREME COURT DECISIONS.13 Petitioner, in the main, asserts that nowhere in the respondents' motions for reconsideration and supplemental motion for reconsideration were the authenticity, accuracy and admissibility of the Swiss decisions ever challenged. Otherwise stated, it was incorrect for the Sandiganbayan to use the issue of lack of authenticated translations of the decisions of the Swiss Federal Supreme Court as the basis for reversing itself because respondents themselves never raised this issue in their motions for reconsideration and supplemental motion for reconsideration. Furthermore, this particular issue relating to the translation of the Swiss court decisions could not be resurrected anymore because said decisions had been previously utilized by the Sandiganbayan itself in resolving a "decisive issue" before it. Petitioner faults the Sandiganbayan for questioning the non-production of the authenticated translations of the Swiss Federal Supreme Court decisions as this was a marginal and technical matter that did not diminish by any measure the conclusiveness and strength of what had been proven and admitted before the Sandiganbayan, that is, that the funds deposited by the Marcoses constituted ill-gotten wealth and thus belonged to the Filipino people. In compliance with the order of this Court, Mrs. Marcos filed her comment to the petition on May 22, 2002. After several motions for extension which were all granted, the comment of Mrs. Manotoc and Ferdinand, Jr. and the separate comment of Mrs. Araneta were filed on May 27, 2002. Mrs. Marcos asserts that the petition should be denied on the following grounds:

A. PETITIONER HAS A PLAIN, SPEEDY, AND ADEQUATE REMEDY AT THE SANDIGANBAYAN. B. THE SANDIGANBAYAN DID NOT ABUSE ITS DISCRETION IN SETTING THE CASE FOR FURTHER PROCEEDINGS.14 Mrs. Marcos contends that petitioner has a plain, speedy and adequate remedy in the ordinary course of law in view of the resolution of the Sandiganbayan dated January 31, 2000 directing petitioner to submit the authenticated translations of the Swiss decisions. Instead of availing of said remedy, petitioner now elevates the matter to this Court. According to Mrs. Marcos, a petition for certiorari which does not comply with the requirements of the rules may be dismissed. Since petitioner has a plain, speedy and adequate remedy, that is, to proceed to trial and submit authenticated translations of the Swiss decisions, its petition before this Court must be dismissed. Corollarily, the Sandiganbayan's ruling to set the case for further proceedings cannot and should not be considered a capricious and whimsical exercise of judgment. Likewise, Mrs. Manotoc and Ferdinand, Jr., in their comment, prayed for the dismissal of the petition on the grounds that: (A) BY THE TIME PETITIONER FILED ITS MOTION FOR SUMMARY JUDGMENT ON 10 MARCH 2000, IT WAS ALREADY BARRED FROM DOING SO. (1) The Motion for Summary Judgment was based on private respondents' Answer and other documents that had long been in the records of the case. Thus, by the time the Motion was filed on 10 March 2000, estoppel by laches had already set in against petitioner. (2) By its positive acts and express admissions prior to filing the Motion for Summary Judgment on 10 March 1990, petitioner had legally bound itself to go to trial on the basis of existing issues. Thus, it clearly waived whatever right it had to move for summary judgment. (B) EVEN ASSUMING THAT PETITIONER WAS NOT LEGALLY BARRED FROM FILING THE MOTION FOR SUMMARY JUDGMENT, THE SANDIGANBAYAN IS CORRECT IN RULING THAT PETITIONER HAS NOT YET ESTABLISHED A PRIMA FACIE CASE FOR THE FORFEITURE OF THE SWISS FUNDS. (1) Republic Act No. 1379, the applicable law, is a penal statute. As such, its provisions, particularly the essential elements stated in section 3 thereof, are mandatory in nature. These should be strictly construed against petitioner and liberally in favor of private respondents. (2) Petitioner has failed to establish the third and fourth essential elements in Section 3 of R.A. 1379 with respect to the identification, ownership, and approximate amount of the property which the Marcos couple allegedly "acquired during their incumbency".

(a) Petitioner has failed to prove that the Marcos couple "acquired" or own the Swiss funds. (b) Even assuming, for the sake of argument, that the fact of acquisition has been proven, petitioner has categorically admitted that it has no evidence showing how much of the Swiss funds was acquired "during the incumbency" of the Marcos couple from 31 December 1965 to 25 February 1986. (3) In contravention of the essential element stated in Section 3 (e) of R.A. 1379, petitioner has failed to establish the other proper earnings and income from legitimately acquired property of the Marcos couple over and above their government salaries. (4) Since petitioner failed to prove the three essential elements provided in paragraphs (c)15 (d),16 and (e)17 of Section 3, R.A. 1379, the inescapable conclusion is that the prima facie presumption of unlawful acquisition of the Swiss funds has not yet attached. There can, therefore, be no premature forfeiture of the funds. (C) IT WAS ONLY BY ARBITRARILY ISOLATING AND THEN TAKING CERTAIN STATEMENTS MADE BY PRIVATE RESPONDENTS OUT OF CONTEXT THAT PETITIONER WAS ABLE TO TREAT THESE AS "JUDICIAL ADMISSIONS" SUFFICIENT TO ESTABLISH A PRIMA FACIE AND THEREAFTER A CONCLUSIVE CASE TO JUSTIFY THE FORFEITURE OF THE SWISS FUNDS. (1) Under Section 27, Rule 130 of the Rules of Court, the General and Supplemental Agreements, as well as the other written and testimonial statements submitted in relation thereto, are expressly barred from being admissible in evidence against private respondents. (2) Had petitioner bothered to weigh the alleged admissions together with the other statements on record, there would be a demonstrable showing that no such "judicial admissions" were made by private respondents. (D) SINCE PETITIONER HAS NOT (YET) PROVEN ALL THE ESSENTIAL ELEMENTS TO ESTABLISH A PRIMA FACIE CASE FOR FORFEITURE, AND PRIVATE RESPONDENTS HAVE NOT MADE ANY JUDICIAL ADMISSION THAT WOULD HAVE FREED IT FROM ITS BURDEN OF PROOF, THE SANDIGANBAYAN DID NOT COMMIT GRAVE ABUSE OF DISCRETION IN DENYING THE MOTION FOR SUMMARY JUDGMENT. CERTIORARI, THEREFORE, DOES NOT LIE, ESPECIALLY AS THIS COURT IS NOT A TRIER OF FACTS.18 For her part, Mrs. Araneta, in her comment to the petition, claims that obviously petitioner is unable to comply with a very plain requirement of respondent Sandiganbayan. The instant petition is allegedly an attempt to elevate to this Court matters, issues and incidents which should be properly threshed out at the Sandiganbayan. To respondent Mrs. Araneta, all other matters, save that pertaining to the authentication of the translated Swiss Court decisions, are irrelevant and impertinent as far as this Court is concerned. Respondent Mrs. Araneta manifests that she is as eager as respondent Sandiganbayan or any interested person to have the Swiss Court decisions officially translated in our known language. She says the authenticated official English version of the

Swiss Court decisions should be presented. This should stop all speculations on what indeed is contained therein. Thus, respondent Mrs. Araneta prays that the petition be denied for lack of merit and for raising matters which, in elaborated fashion, are impertinent and improper before this Court. PROPRIETY OF PETITIONER'S ACTION FOR CERTIORARI But before this Court discusses the more relevant issues, the question regarding the propriety of petitioner Republic's action for certiorari under Rule 6519 of the 1997 Rules of Civil Procedure assailing the Sandiganbayan Resolution dated January 21, 2002 should be threshed out. At the outset, we would like to stress that we are treating this case as an exception to the general rule governing petitions for certiorari. Normally, decisions of the Sandiganbayan are brought before this Court under Rule 45, not Rule 65.20 But where the case is undeniably ingrained with immense public interest, public policy and deep historical repercussions, certiorari is allowed notwithstanding the existence and availability of the remedy of appeal.21 One of the foremost concerns of the Aquino Government in February 1986 was the recovery of the unexplained or ill-gotten wealth reputedly amassed by former President and Mrs. Ferdinand E. Marcos, their relatives, friends and business associates. Thus, the very first Executive Order (EO) issued by then President Corazon Aquino upon her assumption to office after the ouster of the Marcoses was EO No. 1, issued on February 28, 1986. It created the Presidential Commission on Good Government (PCGG) and charged it with the task of assisting the President in the "recovery of all ill-gotten wealth accumulated by former President Ferdinand E. Marcos, his immediate family, relatives, subordinates and close associates, whether located in the Philippines or abroad, including the takeover or sequestration of all business enterprises and entities owned or controlled by them during his administration, directly or through nominees, by taking undue advantage of their public office and/or using their powers, authority, influence, connections or relationship." The urgency of this undertaking was tersely described by this Court inRepublic vs. Lobregat22: surely x x x an enterprise "of great pith and moment"; it was attended by "great expectations"; it was initiated not only out of considerations of simple justice but also out of sheer necessity - the national coffers were empty, or nearly so. In all the alleged ill-gotten wealth cases filed by the PCGG, this Court has seen fit to set aside technicalities and formalities that merely serve to delay or impede judicious resolution. This Court prefers to have such cases resolved on the merits at the Sandiganbayan. But substantial justice to the Filipino people and to all parties concerned, not mere legalisms or perfection of form, should now be relentlessly and firmly pursued. Almost two decades have passed since the government initiated its search for and reversion of such ill-gotten wealth. The definitive resolution of such cases on the merits is thus long overdue. If there is proof of illegal acquisition, accumulation, misappropriation, fraud or illicit conduct, let it be brought out now. Let the ownership of these funds and other assets be finally determined and resolved with dispatch, free from all the delaying technicalities and annoying procedural sidetracks.23 We thus take cognizance of this case and settle with finality all the issues therein. ISSUES BEFORE THIS COURT The crucial issues which this Court must resolve are: (1) whether or not respondents raised any genuine issue of fact which would either justify or negate summary judgment; and (2) whether or not petitioner Republic was able to prove its case for forfeiture in accordance with Sections 2 and 3 of RA 1379.

(1) THE PROPRIETY OF SUMMARY JUDGMENT We hold that respondent Marcoses failed to raise any genuine issue of fact in their pleadings. Thus, on motion of petitioner Republic, summary judgment should take place as a matter of right. In the early case of Auman vs. Estenzo24, summary judgment was described as a judgment which a court may render before trial but after both parties have pleaded. It is ordered by the court upon application by one party, supported by affidavits, depositions or other documents, with notice upon the adverse party who may in turn file an opposition supported also by affidavits, depositions or other documents. This is after the court summarily hears both parties with their respective proofs and finds that there is no genuine issue between them. Summary judgment is sanctioned in this jurisdiction by Section 1, Rule 35 of the 1997 Rules of Civil Procedure: SECTION 1. Summary judgment for claimant.- A party seeking to recover upon a claim, counterclaim, or cross-claim or to obtain a declaratory relief may, at any time after the pleading in answer thereto has been served, move with supporting affidavits, depositions or admissions for a summary judgment in his favor upon all or any part thereof.25 Summary judgment is proper when there is clearly no genuine issue as to any material fact in the action.26 The theory of summary judgment is that, although an answer may on its face appear to tender issues requiring trial, if it is demonstrated by affidavits, depositions or admissions that those issues are not genuine but sham or fictitious, the Court is justified in dispensing with the trial and rendering summary judgment for petitioner Republic. The Solicitor General made a very thorough presentation of its case for forfeiture: xxx 4. Respondent Ferdinand E. Marcos (now deceased and represented by his Estate/Heirs) was a public officer for several decades continuously and without interruption as Congressman, Senator, Senate President and President of the Republic of the Philippines from December 31, 1965 up to his ouster by direct action of the people of EDSA on February 22-25, 1986. 5. Respondent Imelda Romualdez Marcos (Imelda, for short) the former First Lady who ruled with FM during the 14-year martial law regime, occupied the position of Minister of Human Settlements from June 1976 up to the peaceful revolution in February 22-25, 1986. She likewise served once as a member of the Interim Batasang Pambansa during the early years of martial law from 1978 to 1984 and as Metro Manila Governor in concurrent capacity as Minister of Human Settlements. x x x xxx xxx xxx

11. At the outset, however, it must be pointed out that based on the Official Report of the Minister of Budget, the total salaries of former President Marcos as President form 1966 to 1976 was P60,000 a year and from 1977 to 1985, P100,000 a year; while that of the former First Lady, Imelda R. Marcos, as Minister of Human Settlements from June 1976 to February 22-25, 1986 was P75,000 a year xxx. ANALYSIS OF RESPONDENTS LEGITIMATE INCOME

xxx 12. Based on available documents, the ITRs of the Marcoses for the years 1965-1975 were filed under Tax Identification No. 1365-055-1. For the years 1976 until 1984, the returns were filed under Tax Identification No. M 6221-J 1117-A-9. 13. The data contained in the ITRs and Balance Sheet filed by the "Marcoses are summarized and attached to the reports in the following schedules: Schedule A: Schedule of Income (Annex "T" hereof); Schedule B: Schedule of Income Tax Paid (Annex "T-1" hereof); Schedule C: Schedule of Net Disposable Income (Annex "T-2" hereof); Schedule D: Schedule of Networth Analysis (Annex "T-3" hereof). 14. As summarized in Schedule A (Annex "T" hereof), the Marcoses reported P16,408,442.00 or US$2,414,484.91 in total income over a period of 20 years from 1965 to 1984. The sources of income are as follows: Official Salaries - P 2,627,581.00 Legal Practice Farm Income Others Total 11,109,836.00 149,700.00 2,521,325.00 16.01% 67.71% .91% 15.37%

P16,408,442.00 - 100.00%

15. FM's official salary pertains to his compensation as Senate President in 1965 in the amount of P15,935.00 and P1,420,000.00 as President of the Philippines during the period 1966 until 1984. On the other hand, Imelda reported salaries and allowances only for the years 1979 to 1984 in the amount of P1,191,646.00. The records indicate that the reported income came from her salary from the Ministry of Human Settlements and allowances from Food Terminal, Inc., National Home Mortgage Finance Corporation, National Food Authority Council, Light Rail Transit Authority and Home Development Mutual Fund. 16. Of the P11,109,836.00 in reported income from legal practice, the amount of P10,649,836.00 or 96% represents "receivables from prior years" during the period 1967 up to 1984. 17. In the guise of reporting income using the cash method under Section 38 of the National Internal Revenue Code, FM made it appear that he had an extremely profitable legal practice

before he became a President (FM being barred by law from practicing his law profession during his entire presidency) and that, incredibly, he was still receiving payments almost 20 years after. The only problem is that in his Balance Sheet attached to his 1965 ITR immediately preceeding his ascendancy to the presidency he did not show any Receivables from client at all, much less the P10,65-M that he decided to later recognize as income. There are no documents showing any withholding tax certificates. Likewise, there is nothing on record that will show any known Marcos client as he has no known law office. As previously stated, his networth was a mere P120,000.00 in December, 1965. The joint income tax returns of FM and Imelda cannot, therefore, conceal the skeletons of their kleptocracy. 18. FM reported a total of P2,521,325.00 as Other Income for the years 1972 up to 1976 which he referred to in his return as "Miscellaneous Items" and "Various Corporations." There is no indication of any payor of the dividends or earnings. 19. Spouses Ferdinand and Imelda did not declare any income from any deposits and placements which are subject to a 5% withholding tax. The Bureau of Internal Revenue attested that after a diligent search of pertinent records on file with the Records Division, they did not find any records involving the tax transactions of spouses Ferdinand and Imelda in Revenue Region No. 1, Baguio City, Revenue Region No.4A, Manila, Revenue Region No. 4B1, Quezon City and Revenue No. 8, Tacloban, Leyte. Likewise, the Office of the Revenue Collector of Batac. Further, BIR attested that no records were found on any filing of capital gains tax return involving spouses FM and Imelda covering the years 1960 to 1965. 20. In Schedule B, the taxable reported income over the twenty-year period was P14,463,595.00 which represents 88% of the gross income. The Marcoses paid income taxes totaling P8,233,296.00 or US$1,220,667.59. The business expenses in the amount of P861,748.00 represent expenses incurred for subscription, postage, stationeries and contributions while the other deductions in the amount of P567,097.00 represents interest charges, medicare fees, taxes and licenses. The total deductions in the amount of P1,994,845.00 represents 12% of the total gross income. 21. In Schedule C, the net cumulative disposable income amounts to P6,756,301.00 or US$980,709.77. This is the amount that represents that portion of the Marcoses income that is free for consumption, savings and investments. The amount is arrived at by adding back to the net income after tax the personal and additional exemptions for the years 1965-1984, as well as the tax-exempt salary of the President for the years 1966 until 1972. 22. Finally, the networth analysis in Schedule D, represents the total accumulated networth of spouses, Ferdinand and Imelda. Respondent's Balance Sheet attached to their 1965 ITR, covering the year immediately preceding their ascendancy to the presidency, indicates an ending networth of P120,000.00 which FM declared as Library and Miscellaneous assets. In computing for the networth, the income approach was utilized. Under this approach, the beginning capital is increased or decreased, as the case may be, depending upon the income earned or loss incurred. Computations establish the total networth of spouses Ferdinand and Imelda, for the years 1965 until 1984 in the total amount of US$957,487.75, assuming the income from legal practice is real and valid x x x. G. THE SECRET MARCOS DEPOSITS IN SWISS BANKS 23. The following presentation very clearly and overwhelmingly show in detail how both respondents clandestinely stashed away the country's wealth to Switzerland and hid the

same under layers upon layers of foundations and other corporate entities to prevent its detection. Through their dummies/nominees, fronts or agents who formed those foundations or corporate entities, they opened and maintained numerous bank accounts. But due to the difficulty if not the impossibility of detecting and documenting all those secret accounts as well as the enormity of the deposits therein hidden, the following presentation is confined to five identified accounts groups, with balances amounting to about $356-M with a reservation for the filing of a supplemental or separate forfeiture complaint should the need arise. H. THE AZIO-VERSO-VIBUR FOUNDATION ACCOUNTS 24. On June 11, 1971, Ferdinand Marcos issued a written order to Dr. Theo Bertheau, legal counsel of Schweizeresche Kreditanstalt or SKA, also known as Swiss Credit Bank, for him to establish the AZIO Foundation. On the same date, Marcos executed a power of attorney in favor of Roberto S. Benedicto empowering him to transact business in behalf of the said foundation. Pursuant to the said Marcos mandate, AZIO Foundation was formed on June 21, 1971 in Vaduz. Walter Fessler and Ernst Scheller, also of SKA Legal Service, and Dr. Helmuth Merling from Schaan were designated as members of the Board of Trustees of the said foundation. Ferdinand Marcos was named first beneficiary and the Marcos Foundation, Inc. was second beneficiary. On November 12, 1971, FM again issued another written order naming Austrahil PTY Ltd. In Sydney, Australia, as the foundation's first and sole beneficiary. This was recorded on December 14, 1971. 25. In an undated instrument, Marcos changed the first and sole beneficiary to CHARIS FOUNDATION. This change was recorded on December 4, 1972. 26. On August 29, 1978, the AZIO FOUNDATION was renamed to VERSO FOUNDATION. The Board of Trustees remained the same. On March 11, 1981, Marcos issued a written directive to liquidated VERSO FOUNDATION and to transfer all its assets to account of FIDES TRUST COMPANY at Bank Hofman in Zurich under the account "Reference OSER." The Board of Trustees decided to dissolve the foundation on June 25, 1981. 27. In an apparent maneuver to bury further the secret deposits beneath the thick layers of corporate entities, FM effected the establishment of VIBUR FOUNDATION on May 13, 1981 in Vaduz. Atty. Ivo Beck and Limag Management, a wholly-owned subsidiary of Fides Trust, were designated as members of the Board of Trustees. The account was officially opened with SKA on September 10, 1981. The beneficial owner was not made known to the bank since Fides Trust Company acted as fiduciary. However, comparison of the listing of the securities in the safe deposit register of the VERSO FOUNDATION as of February 27, 1981 with that of VIBUR FOUNDATION as of December 31, 1981 readily reveals that exactly the same securities were listed. 28. Under the foregoing circumstances, it is certain that the VIBUR FOUNDATION is the beneficial successor of VERSO FOUNDATION. 29. On March 18, 1986, the Marcos-designated Board of Trustees decided to liquidate VIBUR FOUNDATION. A notice of such liquidation was sent to the Office of the Public Register on March 21, 1986. However, the bank accounts and respective balances of the said VIBUR FOUNDATION remained with SKA. Apparently, the liquidation was an attempt by the Marcoses to transfer the foundation's funds to another account or bank but this was prevented by the timely freeze order issued by the Swiss authorities. One of the latest documents obtained by the PCGG from the Swiss authorities is a declaration signed by Dr. Ivo Beck (the trustee) stating that the beneficial owner of VIBUR FOUNDATION is Ferdinand

E. Marcos. Another document signed by G. Raber of SKA shows that VIBUR FOUNDATION is owned by the "Marcos Familie" 30. As of December 31, 1989, the balance of the bank accounts of VIBUR FOUNDATION with SKA, Zurich, under the General Account No. 469857 totaled $3,597,544.00 I. XANDY-WINTROP: CHARIS-SCOLARIVALAMO-SPINUS-AVERTINA FOUNDATION ACCOUNTS 31. This is the most intricate and complicated account group. As the Flow Chart hereof shows, two (2) groups under the foundation organized by Marcos dummies/nominees for FM's benefit, eventually joined together and became one (1) account group under the AVERTINA FOUNDATION for the benefit of both FM and Imelda. This is the biggest group from where the $50-M investment fund of the Marcoses was drawn when they bought the Central Bank's dollar-denominated treasury notes with high-yielding interests. 32. On March 20, 1968, after his second year in the presidency, Marcos opened bank accounts with SKA using an alias or pseudonym WILLIAM SAUNDERS, apparently to hide his true identity. The next day, March 21, 1968, his First Lady, Mrs. Imelda Marcos also opened her own bank accounts with the same bank using an American-sounding alias, JANE RYAN. Found among the voluminous documents in Malacaang shortly after they fled to Hawaii in haste that fateful night of February 25, 1986, were accomplished forms for "Declaration/Specimen Signatures" submitted by the Marcos couple. Under the caption "signature(s)" Ferdinand and Imelda signed their real names as well as their respective aliases underneath. These accounts were actively operated and maintained by the Marcoses for about two (2) years until their closure sometime in February, 1970 and the balances transferred to XANDY FOUNDATION. 33. The XANDY FOUNDATION was established on March 3, 1970 in Vaduz. C.W. Fessler, C. Souviron and E. Scheller were named as members of the Board of Trustees. 34. FM and Imelda issued the written mandate to establish the foundation to Markus Geel of SKA on March 3, 1970. In the handwritten Regulations signed by the Marcos couple as well as in the type-written Regulations signed by Markus Geel both dated February 13, 1970, the Marcos spouses were named the first beneficiaries, the surviving spouse as the second beneficiary and the Marcos children Imee, Ferdinand, Jr. (Bongbong) and Irene as equal third beneficiaries. 35. The XANDY FOUNDATION was renamed WINTROP FOUNDATION on August 29, 1978. The Board of Trustees remained the same at the outset. However, on March 27, 1980, Souviron was replaced by Dr. Peter Ritter. On March 10. 1981, Ferdinand and Imelda Marcos issued a written order to the Board of Wintrop to liquidate the foundation and transfer all its assets to Bank Hofmann in Zurich in favor of FIDES TRUST COMPANY. Later, WINTROP FOUNDATION was dissolved. 36. The AVERTINA FOUNDATION was established on May 13, 1981 in Vaduz with Atty. Ivo Beck and Limag Management, a wholly-owned subsidiary of FIDES TRUST CO., as members of the Board of Trustees. Two (2) account categories, namely: CAR and NES, were opened on September 10, 1981. The beneficial owner of AVERTINA was not made known to the bank since the FIDES TRUST CO. acted as fiduciary. However, the securities listed in the safe deposit register of WINTROP FOUNDATION Category R as of December 31, 1980 were the same as those listed in the register of AVERTINA FOUNDATION

Category CAR as of December 31, 1981. Likewise, the securities listed in the safe deposit register of WINTROP FOUNDATION Category S as of December 31, 1980 were the same as those listed in the register of Avertina Category NES as of December 31, 1981.Under the circumstances, it is certain that the beneficial successor of WINTROP FOUNDATION is AVERTINA FOUNDATION. The balance of Category CAR as of December 31, 1989 amounted to US$231,366,894.00 while that of Category NES as of 12-31-83 was US$8,647,190.00. Latest documents received from Swiss authorities included a declaration signed by IVO Beck stating that the beneficial owners of AVERTINA FOUNDATION are FM and Imelda. Another document signed by G. Raber of SKA indicates that Avertina Foundation is owned by the "Marcos Families." 37. The other groups of foundations that eventually joined AVERTINA were also established by FM through his dummies, which started with the CHARIS FOUNDATION. 38. The CHARIS FOUNDATION was established in VADUZ on December 27, 1971. Walter Fessler and Ernst Scheller of SKA and Dr. Peter Ritter were named as directors. Dr. Theo Bertheau, SKA legal counsel, acted as founding director in behalf of FM by virtue of the mandate and agreement dated November 12, 1971. FM himself was named the first beneficiary and Xandy Foundation as second beneficiary in accordance with the handwritten instructions of FM on November 12, 1971 and the Regulations. FM gave a power of attorney to Roberto S. Benedicto on February 15, 1972 to act in his behalf with regard to Charis Foundation. 39. On December 13, 1974, Charis Foundation was renamed Scolari Foundation but the directors remained the same. On March 11, 1981 FM ordered in writing that the Valamo Foundation be liquidated and all its assets be transferred to Bank Hofmann, AG in favor of Fides Trust Company under the account "Reference OMAL". The Board of Directors decided on the immediate dissolution of Valamo Foundation on June 25, 1981. 40 The SPINUS FOUNDATION was established on May 13, 1981 in Vaduz with Atty. Ivo Beck and Limag Management, a wholly-owned subsidiary of Fides Trust Co., as members of the Foundation's Board of Directors. The account was officially opened with SKA on September 10, 1981. The beneficial owner of the foundation was not made known to the bank since Fides Trust Co. acted as fiduciary. However, the list of securities in the safe deposit register of Valamo Foundation as of December 31, 1980 are practically the same with those listed in the safe deposit register of Spinus Foundation as of December 31, 1981. Under the circumstances, it is certain that the Spinus Foundation is the beneficial successor of the Valamo Foundation. 41. On September 6, 1982, there was a written instruction from Spinus Foundation to SKA to close its Swiss Franc account and transfer the balance to Avertina Foundation. In July/August, 1982, several transfers from the foundation's German marks and US dollar accounts were made to Avertina Category CAR totaling DM 29.5-M and $58-M, respectively. Moreover, a comparison of the list of securities of the Spinus Foundation as of February 3, 1982 with the safe deposit slips of the Avertina Foundation Category CAR as of August 19, 1982 shows that all the securities of Spinus were transferred to Avertina. J. TRINIDAD-RAYBY-PALMY FOUNDATION ACCOUNTS 42. The Trinidad Foundation was organized on August 26, 1970 in Vaduz with C.W. Fessler and E. Scheller of SKA and Dr. Otto Tondury as the foundation's directors. Imelda issued a written mandate to establish the foundation to Markus Geel on August 26, 1970. The

regulations as well as the agreement, both dated August 28, 1970 were likewise signed by Imelda. Imelda was named the first beneficiary and her children Imelda (Imee), Ferdinand, Jr. (Bongbong) and, Irene were named as equal second beneficiaries. 43. Rayby Foundation was established on June 22, 1973 in Vaduz with Fessler, Scheller and Ritter as members of the board of directors. Imelda issued a written mandate to Dr. Theo Bertheau to establish the foundation with a note that the foundation's capitalization as well as the cost of establishing it be debited against the account of Trinidad Foundation. Imelda was named the first and only beneficiary of Rayby foundation. According to written information from SKA dated November 28, 1988, Imelda apparently had the intention in 1973 to transfer part of the assets of Trinidad Foundation to another foundation, thus the establishment of Rayby Foundation. However, transfer of assets never took place. On March 10, 1981, Imelda issued a written order to transfer all the assets of Rayby Foundation to Trinidad Foundation and to subsequently liquidate Rayby. On the same date, she issued a written order to the board of Trinidad to dissolve the foundation and transfer all its assets to Bank Hofmann in favor of Fides Trust Co. Under the account "Reference Dido," Rayby was dissolved on April 6, 1981 and Trinidad was liquidated on August 3, 1981. 44. The PALMY FOUNDATION was established on May 13, 1981 in Vaduz with Dr. Ivo Beck and Limag Management, a wholly-owned subsidiary of Fides Trust Co, as members of the Foundation's Board of Directors. The account was officially opened with the SKA on September 10, 1981. The beneficial owner was not made known to the bank since Fides Trust Co. acted as fiduciary. However, when one compares the listing of securities in the safe deposit register of Trinidad Foundation as of December 31,1980 with that of the Palmy Foundation as of December 31, 1980, one can clearly see that practically the same securities were listed. Under the circumstances, it is certain that the Palmy Foundation is the beneficial successor of the Trinidad Foundation. 45. As of December 31, 1989, the ending balance of the bank accounts of Palmy Foundation under General Account No. 391528 is $17,214,432.00. 46. Latest documents received from Swiss Authorities included a declaration signed by Dr. Ivo Beck stating that the beneficial owner of Palmy Foundation is Imelda. Another document signed by Raber shows that the said Palmy Foundation is owned by "Marcos Familie". K. ROSALYS-AGUAMINA FOUNDATION ACCOUNTS 47. Rosalys Foundation was established in 1971 with FM as the beneficiary. Its Articles of Incorporation was executed on September 24, 1971 and its By-Laws on October 3, 1971. This foundation maintained several accounts with Swiss Bank Corporation (SBC) under the general account 51960 where most of the bribe monies from Japanese suppliers were hidden. 48. On December 19, 1985, Rosalys Foundation was liquidated and all its assets were transferred to Aguamina Corporation's (Panama) Account No. 53300 with SBC. The ownership by Aguamina Corporation of Account No. 53300 is evidenced by an opening account documents from the bank. J. Christinaz and R.L. Rossier, First Vice-President and Senior Vice President, respectively, of SBC, Geneva issued a declaration dated September 3, 1991 stating that the by-laws dated October 3, 1971 governing Rosalys Foundation was the same by-law applied to Aguamina Corporation Account No. 53300. They further confirmed that no change of beneficial owner was involved while transferring the assets of

Rosalys to Aguamina. Hence, FM remains the beneficiary of Aguamina Corporation Account No. 53300. As of August 30, 1991, the ending balance of Account No. 53300 amounted to $80,566,483.00. L. MALER FOUNDATION ACCOUNTS 49. Maler was first created as an establishment. A statement of its rules and regulations was found among Malacaang documents. It stated, among others, that 50% of the Company's assets will be for sole and full right disposal of FM and Imelda during their lifetime, which the remaining 50% will be divided in equal parts among their children. Another Malacaang document dated October 19,1968 and signed by Ferdinand and Imelda pertains to the appointment of Dr. Andre Barbey and Jean Louis Sunier as attorneys of the company and as administrator and manager of all assets held by the company. The Marcos couple, also mentioned in the said document that they bought the Maler Establishment from SBC, Geneva. On the same date, FM and Imelda issued a letter addressed to Maler Establishment, stating that all instructions to be transmitted with regard to Maler will be signed with the word "JOHN LEWIS". This word will have the same value as the couple's own personal signature. The letter was signed by FM and Imelda in their signatures and as John Lewis. 50. Maler Establishment opened and maintained bank accounts with SBC, Geneva. The opening bank documents were signed by Dr. Barbey and Mr. Sunnier as authorized signatories. 51. On November 17, 1981, it became necessary to transform Maler Establishment into a foundation. Likewise, the attorneys were changed to Michael Amaudruz, et. al. However, administration of the assets was left to SBC. The articles of incorporation of Maler Foundation registered on November 17, 1981 appear to be the same articles applied to Maler Establishment. On February 28, 1984, Maler Foundation cancelled the power of attorney for the management of its assets in favor of SBC and transferred such power to Sustrust Investment Co., S.A. 52. As of June 6, 1991, the ending balance of Maler Foundation's Account Nos. 254,508 BT and 98,929 NY amount SF 9,083,567 and SG 16,195,258, respectively, for a total of SF 25,278,825.00. GM only until December 31, 1980. This account was opened by Maler when it was still an establishment which was subsequently transformed into a foundation. 53. All the five (5) group accounts in the over-all flow chart have a total balance of about Three Hundred Fifty Six Million Dollars ($356,000,000.00) as shown by Annex "R-5" hereto attached as integral part hereof. xxx x x x.27

Respondents Imelda R. Marcos, Maria Imelda M. Manotoc, Irene M. Araneta and Ferdinand Marcos, Jr., in their answer, stated the following: xxx xxx xxx

4. Respondents ADMIT paragraphs 3 and 4 of the Petition.

5. Respondents specifically deny paragraph 5 of the Petition in so far as it states that summons and other court processes may be served on Respondent Imelda R. Marcos at the stated address the truth of the matter being that Respondent Imelda R. Marcos may be served with summons and other processes at No. 10-B Bel Air Condominium 5022 P. Burgos Street, Makati, Metro Manila, and ADMIT the rest. xxx xxx xxx

10. Respondents ADMIT paragraph 11 of the Petition. 11. Respondents specifically DENY paragraph 12 of the Petition for lack of knowledge sufficient to form a belief as to the truth of the allegation since Respondents were not privy to the transactions and that they cannot remember exactly the truth as to the matters alleged. 12. Respondents specifically DENY paragraph 13 of the Petition for lack of knowledge or information sufficient to form a belief as to the truth of the allegation since Respondents cannot remember with exactitude the contents of the alleged ITRs and Balance Sheet. 13. Respondents specifically DENY paragraph 14 of the Petition for lack of knowledge or information sufficient to form a belief as to the truth of the allegation since Respondents cannot remember with exactitude the contents of the alleged ITRs. 14. Respondents specifically DENY paragraph 15 of the Petition for lack of knowledge or information sufficient to form a belief as to the truth of the allegation since Respondents cannot remember with exactitude the contents of the alleged ITRs. 15. Respondents specifically DENY paragraph 16 of the Petition for lack of knowledge or information sufficient to form a belief as to the truth of the allegation since Respondents cannot remember with exactitude the contents of the alleged ITRs. 16. Respondents specifically DENY paragraph 17 of the Petition insofar as it attributes willful duplicity on the part of the late President Marcos, for being false, the same being pure conclusions based on pure assumption and not allegations of fact; and specifically DENY the rest for lack of knowledge or information sufficient to form a belief as to the truth of the allegation since Respondents cannot remember with exactitude the contents of the alleged ITRs or the attachments thereto. 17. Respondents specifically DENY paragraph 18 of the Petition for lack of knowledge or information sufficient to form a belief as to the truth of the allegation since Respondents cannot remember with exactitude the contents of the alleged ITRs. 18. Respondents specifically DENY paragraph 19 of the Petition for lack of knowledge or information sufficient to form a belief as to the truth of the allegation since Respondents cannot remember with exactitude the contents of the alleged ITRs and that they are not privy to the activities of the BIR. 19. Respondents specifically DENY paragraph 20 of the Petition for lack of knowledge or information sufficient to form a belief as to the truth of the allegation since Respondents cannot remember with exactitude the contents of the alleged ITRs.

20. Respondents specifically DENY paragraph 21 of the Petition for lack of knowledge or information sufficient to form a belief as to the truth of the allegation since Respondents cannot remember with exactitude the contents of the alleged ITRs. 21. Respondents specifically DENY paragraph 22 of the Petition for lack of knowledge or information sufficient to form a belief as to the truth of the allegation since Respondents cannot remember with exactitude the contents of the alleged ITRs. 22. Respondents specifically DENY paragraph 23 insofar as it alleges that Respondents clandestinely stashed the country's wealth in Switzerland and hid the same under layers and layers of foundation and corporate entities for being false, the truth being that Respondents aforesaid properties were lawfully acquired. 23. Respondents specifically DENY paragraphs 24, 25, 26, 27, 28, 29 and 30 of the Petition for lack of knowledge or information sufficient to form a belief as to the truth of the allegation since Respondents were not privy to the transactions regarding the alleged Azio-Verso-Vibur Foundation accounts, except that as to Respondent Imelda R. Marcos she specifically remembers that the funds involved were lawfully acquired. 24. Respondents specifically DENY paragraphs 31, 32, 33, 34, 35, 36,37, 38, 39, 40, and 41 of the Petition for lack of knowledge or information sufficient to form a belief as to the truth of the allegations since Respondents are not privy to the transactions and as to such transaction they were privy to they cannot remember with exactitude the same having occurred a long time ago, except that as to Respondent Imelda R. Marcos she specifically remembers that the funds involved were lawfully acquired. 25. Respondents specifically DENY paragraphs 42, 43, 44, 45, and 46, of the Petition for lack of knowledge or information sufficient to form a belief as to the truth of the allegations since Respondents were not privy to the transactions and as to such transaction they were privy to they cannot remember with exactitude the same having occurred a long time ago, except that as to Respondent Imelda R. Marcos she specifically remembers that the funds involved were lawfully acquired. 26. Respondents specifically DENY paragraphs 49, 50, 51 and 52, of the Petition for lack of knowledge or information sufficient to form a belief as to the truth of the allegations since Respondents were not privy to the transactions and as to such transaction they were privy to they cannot remember with exactitude the same having occurred a long time ago, except that as to Respondent Imelda R. Marcos she specifically remembers that the funds involved were lawfully acquired. Upon careful perusal of the foregoing, the Court finds that respondent Mrs. Marcos and the Marcos children indubitably failed to tender genuine issues in their answer to the petition for forfeiture. A genuine issue is an issue of fact which calls for the presentation of evidence as distinguished from an issue which is fictitious and contrived, set up in bad faith or patently lacking in substance so as not to constitute a genuine issue for trial. Respondents' defenses of "lack of knowledge for lack of privity" or "(inability to) recall because it happened a long time ago" or, on the part of Mrs. Marcos, that "the funds were lawfully acquired" are fully insufficient to tender genuine issues. Respondent Marcoses' defenses were a sham and evidently calibrated to compound and confuse the issues. The following pleadings filed by respondent Marcoses are replete with indications of a spurious defense:

(a) Respondents' Answer dated October 18, 1993; (b) Pre-trial Brief dated October 4, 1999 of Mrs. Marcos, Supplemental Pre-trial Brief dated October 19, 1999 of Ferdinand, Jr. and Mrs. Imee Marcos-Manotoc adopting the pre-trial brief of Mrs. Marcos, and Manifestation dated October 19, 1999 of Irene Marcos-Araneta adopting the pre-trial briefs of her co- respondents; (c) Opposition to Motion for Summary Judgment dated March 21, 2000, filed by Mrs. Marcos which the other respondents (Marcos children) adopted; (d) Demurrer to Evidence dated May 2, 2000 filed by Mrs. Marcos and adopted by the Marcos children; (e) Motion for Reconsideration dated September 26, 2000 filed by Mrs. Marcos; Motion for Reconsideration dated October 5, 2000 jointly filed by Mrs. Manotoc and Ferdinand, Jr., and Supplemental Motion for Reconsideration dated October 9, 2000 likewise jointly filed by Mrs. Manotoc and Ferdinand, Jr.; (f) Memorandum dated December 12, 2000 of Mrs. Marcos and Memorandum dated December 17, 2000 of the Marcos children; (g) Manifestation dated May 26, 1998; and (h) General/Supplemental Agreement dated December 23, 1993. An examination of the foregoing pleadings is in order. Respondents' Answer dated October 18, 1993.

In their answer, respondents failed to specifically deny each and every allegation contained in the petition for forfeiture in the manner required by the rules. All they gave were stock answers like "they have no sufficient knowledge" or "they could not recall because it happened a long time ago," and, as to Mrs. Marcos, "the funds were lawfully acquired," without stating the basis of such assertions. Section 10, Rule 8 of the 1997 Rules of Civil Procedure, provides: A defendant must specify each material allegation of fact the truth of which he does not admit and, whenever practicable, shall set forth the substance of the matters upon which he relies to support his denial. Where a defendant desires to deny only a part of an averment, he shall specify so much of it as is true and material and shall deny the remainder. Where a defendant is without knowledge or information sufficient to form a belief as to the truth of a material averment made in the complaint, he shall so state, and this shall have the effect of a denial.28 The purpose of requiring respondents to make a specific denial is to make them disclose facts which will disprove the allegations of petitioner at the trial, together with the matters they rely upon in support of such denial. Our jurisdiction adheres to this rule to avoid and prevent unnecessary expenses and waste of time by compelling both parties to lay their cards on the table, thus reducing the controversy to its true terms. As explained in Alonso vs. Villamor,29

A litigation is not a game of technicalities in which one, more deeply schooled and skilled in the subtle art of movement and position, entraps and destroys the other. It is rather a contest in which each contending party fully and fairly lays before the court the facts in issue and then, brushing aside as wholly trivial and indecisive all imperfections of form and technicalities of procedure, asks that justice be done upon the merits. Lawsuits, unlike duels, are not to be won by a rapier's thrust. On the part of Mrs. Marcos, she claimed that the funds were lawfully acquired. However, she failed to particularly state the ultimate facts surrounding the lawful manner or mode of acquisition of the subject funds. Simply put, she merely stated in her answer with the other respondents that the funds were "lawfully acquired" without detailing how exactly these funds were supposedly acquired legally by them. Even in this case before us, her assertion that the funds were lawfully acquired remains bare and unaccompanied by any factual support which can prove, by the presentation of evidence at a hearing, that indeed the funds were acquired legitimately by the Marcos family. Respondents' denials in their answer at the Sandiganbayan were based on their alleged lack of knowledge or information sufficient to form a belief as to the truth of the allegations of the petition. It is true that one of the modes of specific denial under the rules is a denial through a statement that the defendant is without knowledge or information sufficient to form a belief as to the truth of the material averment in the complaint. The question, however, is whether the kind of denial in respondents' answer qualifies as the specific denial called for by the rules. We do not think so. In Morales vs. Court of Appeals,30 this Court ruled that if an allegation directly and specifically charges a party with having done, performed or committed a particular act which the latter did not in fact do, perform or commit, a categorical and express denial must be made. Here, despite the serious and specific allegations against them, the Marcoses responded by simply saying that they had no knowledge or information sufficient to form a belief as to the truth of such allegations. Such a general, self-serving claim of ignorance of the facts alleged in the petition for forfeiture was insufficient to raise an issue. Respondent Marcoses should have positively stated how it was that they were supposedly ignorant of the facts alleged.31 To elucidate, the allegation of petitioner Republic in paragraph 23 of the petition for forfeiture stated: 23. The following presentation very clearly and overwhelmingly show in detail how both respondents clandestinely stashed away the country's wealth to Switzerland and hid the same under layers upon layers of foundations and other corporate entities to prevent its detection. Through their dummies/nominees, fronts or agents who formed those foundations or corporate entities, they opened and maintained numerous bank accounts. But due to the difficulty if not the impossibility of detecting and documenting all those secret accounts as well as the enormity of the deposits therein hidden, the following presentation is confined to five identified accounts groups, with balances amounting to about $356-M with a reservation for the filing of a supplemental or separate forfeiture complaint should the need arise.32 Respondents' lame denial of the aforesaid allegation was: 22. Respondents specifically DENY paragraph 23 insofar as it alleges that Respondents clandestinely stashed the country's wealth in Switzerland and hid the same under layers and layers of foundations and corporate entities for being false, the truth being that Respondents' aforesaid properties were lawfully acquired.33

Evidently, this particular denial had the earmark of what is called in the law on pleadings as a negative pregnant, that is, a denial pregnant with the admission of the substantial facts in the pleading responded to which are not squarely denied. It was in effect an admission of the averments it was directed at.34 Stated otherwise, a negative pregnant is a form of negative expression which carries with it an affirmation or at least an implication of some kind favorable to the adverse party. It is a denial pregnant with an admission of the substantial facts alleged in the pleading. Where a fact is alleged with qualifying or modifying language and the words of the allegation as so qualified or modified are literally denied, has been held that the qualifying circumstances alone are denied while the fact itself is admitted.35 In the instant case, the material allegations in paragraph 23 of the said petition were not specifically denied by respondents in paragraph 22 of their answer. The denial contained in paragraph 22 of the answer was focused on the averment in paragraph 23 of the petition for forfeiture that "Respondents clandestinely stashed the country's wealth in Switzerland and hid the same under layers and layers of foundations and corporate entities." Paragraph 22 of the respondents' answer was thus a denial pregnant with admissions of the following substantial facts: (1) the Swiss bank deposits existed and (2) that the estimated sum thereof was US$356 million as of December, 1990. Therefore, the allegations in the petition for forfeiture on the existence of the Swiss bank deposits in the sum of about US$356 million, not having been specifically denied by respondents in their answer, were deemed admitted by them pursuant to Section 11, Rule 8 of the 1997 Revised Rules on Civil Procedure: Material averment in the complaint, xxx shall be deemed admitted when not specifically denied. xxx.36 By the same token, the following unsupported denials of respondents in their answer were pregnant with admissions of the substantial facts alleged in the Republic's petition for forfeiture: 23. Respondents specifically DENY paragraphs 24, 25, 26, 27, 28, 29 and 30 of the Petition for lack of knowledge or information sufficient to form a belief as to the truth of the allegation since respondents were not privy to the transactions regarding the alleged Azio-Verso-Vibur Foundation accounts, except that, as to respondent Imelda R. Marcos, she specifically remembers that the funds involved were lawfully acquired. 24. Respondents specifically DENY paragraphs 31, 32, 33, 34, 35, 36, 37, 38, 39, 40, 41 of the Petition for lack of knowledge or information sufficient to form a belief as to the truth of the allegations since respondents were not privy to the transactions and as to such transactions they were privy to, they cannot remember with exactitude the same having occurred a long time ago, except as to respondent Imelda R. Marcos, she specifically remembers that the funds involved were lawfully acquired. 25. Respondents specifically DENY paragraphs 42, 43, 45, and 46 of the petition for lack of knowledge or information sufficient to from a belief as to the truth of the allegations since respondents were not privy to the transactions and as to such transaction they were privy to, they cannot remember with exactitude, the same having occurred a long time ago, except that as to respondent Imelda R. Marcos, she specifically remembers that the funds involved were lawfully acquired.

26. Respondents specifically DENY paragraphs 49, 50, 51 and 52 of the petition for lack of knowledge and information sufficient to form a belief as to the truth of the allegations since respondents were not privy to the transactions and as to such transaction they were privy to they cannot remember with exactitude the same having occurred a long time ago, except that as to respondent Imelda R. Marcos, she specifically remembers that the funds involved were lawfully acquired. The matters referred to in paragraphs 23 to 26 of the respondents' answer pertained to the creation of five groups of accounts as well as their respective ending balances and attached documents alleged in paragraphs 24 to 52 of the Republic's petition for forfeiture. Respondent Imelda R. Marcos never specifically denied the existence of the Swiss funds. Her claim that "the funds involved were lawfully acquired" was an acknowledgment on her part of the existence of said deposits. This only reinforced her earlier admission of the allegation in paragraph 23 of the petition for forfeiture regarding the existence of the US$356 million Swiss bank deposits. The allegations in paragraphs 4737 and 4838 of the petition for forfeiture referring to the creation and amount of the deposits of the Rosalys-Aguamina Foundation as well as the averment in paragraph 52-a39 of the said petition with respect to the sum of the Swiss bank deposits estimated to be US$356 million were again not specifically denied by respondents in their answer. The respondents did not at all respond to the issues raised in these paragraphs and the existence, nature and amount of the Swiss funds were therefore deemed admitted by them. As held in Galofa vs. Nee Bon Sing,40 if a defendant's denial is a negative pregnant, it is equivalent to an admission. Moreover, respondents' denial of the allegations in the petition for forfeiture "for lack of knowledge or information sufficient to form a belief as to the truth of the allegations since respondents were not privy to the transactions" was just a pretense. Mrs. Marcos' privity to the transactions was in fact evident from her signatures on some of the vital documents41 attached to the petition for forfeiture which Mrs. Marcos failed to specifically deny as required by the rules.42 It is worthy to note that the pertinent documents attached to the petition for forfeiture were even signed personally by respondent Mrs. Marcos and her late husband, Ferdinand E. Marcos, indicating that said documents were within their knowledge. As correctly pointed out by Sandiganbayan Justice Francisco Villaruz, Jr. in his dissenting opinion: The pattern of: 1) creating foundations, 2) use of pseudonyms and dummies, 3) approving regulations of the Foundations for the distribution of capital and income of the Foundations to the First and Second beneficiary (who are no other than FM and his family), 4) opening of bank accounts for the Foundations, 5) changing the names of the Foundations, 6) transferring funds and assets of the Foundations to other Foundations or Fides Trust, 7) liquidation of the Foundations as substantiated by the Annexes U to U-168, Petition [for forfeiture] strongly indicate that FM and/or Imelda were the real owners of the assets deposited in the Swiss banks, using the Foundations as dummies.43 How could respondents therefore claim lack of sufficient knowledge or information regarding the existence of the Swiss bank deposits and the creation of five groups of accounts when Mrs. Marcos and her late husband personally masterminded and participated in the formation and control of said foundations? This is a fact respondent Marcoses were never able to explain. Not only that. Respondents' answer also technically admitted the genuineness and due execution of the Income Tax Returns (ITRs) and the balance sheets of the late Ferdinand E. Marcos and Imelda R. Marcos attached to the petition for forfeiture, as well as the veracity of the contents thereof.

The answer again premised its denials of said ITRs and balance sheets on the ground of lack of knowledge or information sufficient to form a belief as to the truth of the contents thereof. Petitioner correctly points out that respondents' denial was not really grounded on lack of knowledge or information sufficient to form a belief but was based on lack of recollection. By reviewing their own records, respondent Marcoses could have easily determined the genuineness and due execution of the ITRs and the balance sheets. They also had the means and opportunity of verifying the same from the records of the BIR and the Office of the President. They did not. When matters regarding which respondents claim to have no knowledge or information sufficient to form a belief are plainly and necessarily within their knowledge, their alleged ignorance or lack of information will not be considered a specific denial.44 An unexplained denial of information within the control of the pleader, or is readily accessible to him, is evasive and is insufficient to constitute an effective denial.45 The form of denial adopted by respondents must be availed of with sincerity and in good faith, and certainly not for the purpose of confusing the adverse party as to what allegations of the petition are really being challenged; nor should it be made for the purpose of delay.46 In the instant case, the Marcoses did not only present unsubstantiated assertions but in truth attempted to mislead and deceive this Court by presenting an obviously contrived defense. Simply put, a profession of ignorance about a fact which is patently and necessarily within the pleader's knowledge or means of knowing is as ineffective as no denial at all.47 Respondents' ineffective denial thus failed to properly tender an issue and the averments contained in the petition for forfeiture were deemed judicially admitted by them. As held in J.P. Juan & Sons, Inc. vs. Lianga Industries, Inc.: Its "specific denial" of the material allegation of the petition without setting forth the substance of the matters relied upon to support its general denial, when such matters were plainly within its knowledge and it could not logically pretend ignorance as to the same, therefore, failed to properly tender on issue.48 Thus, the general denial of the Marcos children of the allegations in the petition for forfeiture "for lack of knowledge or information sufficient to form a belief as to the truth of the allegations since they were not privy to the transactions" cannot rightfully be accepted as a defense because they are the legal heirs and successors-in-interest of Ferdinand E. Marcos and are therefore bound by the acts of their father vis-a-vis the Swiss funds. PRE-TRIAL BRIEF DATED OCTOBER 18, 1993

The pre-trial brief of Mrs. Marcos was adopted by the three Marcos children. In said brief, Mrs. Marcos stressed that the funds involved were lawfully acquired. But, as in their answer, they failed to state and substantiate how these funds were acquired lawfully. They failed to present and attach even a single document that would show and prove the truth of their allegations. Section 6, Rule 18 of the 1997 Rules of Civil Procedure provides: The parties shall file with the court and serve on the adverse party, x x x their respective pre-trial briefs which shall contain, among others: xxx

(d) the documents or exhibits to be presented, stating the purpose thereof; xxx (f) the number and names of the witnesses, and the substance of their respective testimonies.49 It is unquestionably within the court's power to require the parties to submit their pre-trial briefs and to state the number of witnesses intended to be called to the stand, and a brief summary of the evidence each of them is expected to give as well as to disclose the number of documents to be submitted with a description of the nature of each. The tenor and character of the testimony of the witnesses and of the documents to be deduced at the trial thus made known, in addition to the particular issues of fact and law, it becomes apparent if genuine issues are being put forward necessitating the holding of a trial. Likewise, the parties are obliged not only to make a formal identification and specification of the issues and their proofs, and to put these matters in writing and submit them to the court within the specified period for the prompt disposition of the action.50 The pre-trial brief of Mrs. Marcos, as subsequently adopted by respondent Marcos children, merely stated: xxx WITNESSES 4.1 Respondent Imelda will present herself as a witness and reserves the right to present additional witnesses as may be necessary in the course of the trial. xxx DOCUMENTARY EVIDENCE 5.1 Respondent Imelda reserves the right to present and introduce in evidence documents as may be necessary in the course of the trial. Mrs. Marcos did not enumerate and describe the documents constituting her evidence. Neither the names of witnesses nor the nature of their testimony was stated. What alone appeared certain was the testimony of Mrs. Marcos only who in fact had previously claimed ignorance and lack of knowledge. And even then, the substance of her testimony, as required by the rules, was not made known either. Such cunning tactics of respondents are totally unacceptable to this Court. We hold that, since no genuine issue was raised, the case became ripe for summary judgment. OPPOSITION TO MOTION FOR SUMMARY JUDGMENT DATED MARCH 21, 2000

The opposition filed by Mrs. Marcos to the motion for summary judgment dated March 21, 2000 of petitioner Republic was merely adopted by the Marcos children as their own opposition to the said motion. However, it was again not accompanied by affidavits, depositions or admissions as required by Section 3, Rule 35 of the 1997 Rules on Civil Procedure: x x x The adverse party may serve opposing affidavits, depositions, or admissions at least three (3) days before hearing. After hearing, the judgment sought shall be rendered forthwith

if the pleadings, supporting affidavits, depositions, and admissions on file, show that, except as to the amount of damages, there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.51 The absence of opposing affidavits, depositions and admissions to contradict the sworn declarations in the Republic's motion only demonstrated that the averments of such opposition were not genuine and therefore unworthy of belief. Demurrer to Evidence dated May 2, 2000;52 Motions for Reconsideration;53 and Memoranda of Mrs. Marcos and the Marcos children54

All these pleadings again contained no allegations of facts showing their lawful acquisition of the funds. Once more, respondents merely made general denials without alleging facts which would have been admissible in evidence at the hearing, thereby failing to raise genuine issues of fact. Mrs. Marcos insists in her memorandum dated October 21, 2002 that, during the pre-trial, her counsel stated that his client was just a beneficiary of the funds, contrary to petitioner Republic's allegation that Mrs. Marcos disclaimed ownership of or interest in the funds. This is yet another indication that respondents presented a fictitious defense because, during the pre-trial, Mrs. Marcos and the Marcos children denied ownership of or interest in the Swiss funds: PJ Garchitorena: Make of record that as far as Imelda Marcos is concerned through the statement of Atty. Armando M. Marcelo that the US$360 million more or less subject matter of the instant lawsuit as allegedly obtained from the various Swiss Foundations do not belong to the estate of Marcos or to Imelda Marcos herself. That's your statement of facts? Atty. MARCELO: Yes, Your Honor. PJ Garchitorena: That's it. Okay. Counsel for Manotoc and Manotoc, Jr. What is your point here? Does the estate of Marcos own anything of the $360 million subject of this case. Atty. TECSON: We joined the Manifestation of Counsel. PJ Garchitorena: You do not own anything? Atty. TECSON:

Yes, Your Honor. PJ Garchitorena: Counsel for Irene Araneta? Atty. SISON: I join the position taken by my other compaeros here, Your Honor. xxx Atty. SISON: Irene Araneta as heir do (sic) not own any of the amount, Your Honor.55 We are convinced that the strategy of respondent Marcoses was to confuse petitioner Republic as to what facts they would prove or what issues they intended to pose for the court's resolution. There is no doubt in our mind that they were leading petitioner Republic, and now this Court, to perplexity, if not trying to drag this forfeiture case to eternity. Manifestation dated May 26, 1998 filed by MRS. Marcos; General/Supplemental Compromise Agreement dated December 28, 1993

These pleadings of respondent Marcoses presented nothing but feigned defenses. In their earlier pleadings, respondents alleged either that they had no knowledge of the existence of the Swiss deposits or that they could no longer remember anything as it happened a long time ago. As to Mrs. Marcos, she remembered that it was lawfully acquired. In her Manifestation dated May 26, 1998, Mrs. Marcos stated that: COMES NOW undersigned counsel for respondent Imelda R. Marcos, and before this Honorable Court, most respectfully manifests: That respondent Imelda R, Marcos owns 90% of the subject matter of the above-entitled case, being the sole beneficiary of the dollar deposits in the name of the various foundations alleged in the case; That in fact only 10% of the subject matter in the above-entitled case belongs to the estate of the late President Ferdinand E. Marcos. In the Compromise/Supplemental Agreements, respondent Marcoses sought to implement the agreed distribution of the Marcos assets, including the Swiss deposits. This was, to us, an unequivocal admission of ownership by the Marcoses of the said deposits. But, as already pointed out, during the pre-trial conference, respondent Marcoses denied knowledge as well as ownership of the Swiss funds.

Anyway we look at it, respondent Marcoses have put forth no real defense. The "facts" pleaded by respondents, while ostensibly raising important questions or issues of fact, in reality comprised mere verbiage that was evidently wanting in substance and constituted no genuine issues for trial. We therefore rule that, under the circumstances, summary judgment is proper. In fact, it is the law itself which determines when summary judgment is called for. Under the rules, summary judgment is appropriate when there are no genuine issues of fact requiring the presentation of evidence in a full-blown trial. Even if on their face the pleadings appear to raise issue, if the affidavits, depositions and admissions show that such issues are not genuine, then summary judgment as prescribed by the rules must ensue as a matter of law.56 In sum, mere denials, if unaccompanied by any fact which will be admissible in evidence at a hearing, are not sufficient to raise genuine issues of fact and will not defeat a motion for summary judgment.57 A summary judgment is one granted upon motion of a party for an expeditious settlement of the case, it appearing from the pleadings, depositions, admissions and affidavits that there are no important questions or issues of fact posed and, therefore, the movant is entitled to a judgment as a matter of law. A motion for summary judgment is premised on the assumption that the issues presented need not be tried either because these are patently devoid of substance or that there is no genuine issue as to any pertinent fact. It is a method sanctioned by the Rules of Court for the prompt disposition of a civil action where there exists no serious controversy.58 Summary judgment is a procedural device for the prompt disposition of actions in which the pleadings raise only a legal issue, not a genuine issue as to any material fact. The theory of summary judgment is that, although an answer may on its face appear to tender issues requiring trial, if it is established by affidavits, depositions or admissions that those issues are not genuine but fictitious, the Court is justified in dispensing with the trial and rendering summary judgment for petitioner.59 In the various annexes to the petition for forfeiture, petitioner Republic attached sworn statements of witnesses who had personal knowledge of the Marcoses' participation in the illegal acquisition of funds deposited in the Swiss accounts under the names of five groups or foundations. These sworn statements substantiated the ill-gotten nature of the Swiss bank deposits. In their answer and other subsequent pleadings, however, the Marcoses merely made general denials of the allegations against them without stating facts admissible in evidence at the hearing, thereby failing to raise any genuine issues of fact. Under these circumstances, a trial would have served no purpose at all and would have been totally unnecessary, thus justifying a summary judgment on the petition for forfeiture. There were no opposing affidavits to contradict the sworn declarations of the witnesses of petitioner Republic, leading to the inescapable conclusion that the matters raised in the Marcoses' answer were false. Time and again, this Court has encountered cases like this which are either only half-heartedly defended or, if the semblance of a defense is interposed at all, it is only to delay disposition and gain time. It is certainly not in the interest of justice to allow respondent Marcoses to avail of the appellate remedies accorded by the Rules of Court to litigants in good faith, to the prejudice of the Republic and ultimately of the Filipino people. From the beginning, a candid demonstration of respondents' good faith should have been made to the court below. Without the deceptive reasoning and argumentation, this protracted litigation could have ended a long time ago. Since 1991, when the petition for forfeiture was first filed, up to the present, all respondents have offered are foxy responses like "lack of sufficient knowledge or lack of privity" or "they cannot recall because it happened a long time ago" or, as to Mrs. Marcos, "the funds were lawfully acquired." But,

whenever it suits them, they also claim ownership of 90% of the funds and allege that only 10% belongs to the Marcos estate. It has been an incredible charade from beginning to end. In the hope of convincing this Court to rule otherwise, respondents Maria Imelda Marcos-Manotoc and Ferdinand R. Marcos Jr. contend that "by its positive acts and express admissions prior to filing the motion for summary judgment on March 10, 2000, petitioner Republic had bound itself to go to trial on the basis of existing issues. Thus, it had legally waived whatever right it had to move for summary judgment."60 We do not think so. The alleged positive acts and express admissions of the petitioner did not preclude it from filing a motion for summary judgment. Rule 35 of the 1997 Rules of Civil Procedure provides: Rule 35 Summary Judgment Section 1. Summary judgment for claimant. - A party seeking to recover upon a claim, counterclaim, or cross-claim or to obtain a declaratory relief may, at any time after the pleading in answer thereto has been served, move with supporting affidavits, depositions or admissions for a summary judgment in his favor upon all or any part thereof. Section 2. Summary judgment for defending party. - A party against whom a claim, counterclaim, or cross-claim is asserted or a declaratory relief is sought may, at any time, move with supporting affidavits, depositions or admissions for a summary judgment in his favor as to all or any part thereof. (Emphasis ours)61 Under the rule, the plaintiff can move for summary judgment "at any time after the pleading in answer thereto (i.e., in answer to the claim, counterclaim or cross-claim) has been served." No fixed reglementary period is provided by the Rules. How else does one construe the phrase "any time after the answer has been served?" This issue is actually one of first impression. No local jurisprudence or authoritative work has touched upon this matter. This being so, an examination of foreign laws and jurisprudence, particularly those of the United States where many of our laws and rules were copied, is in order. Rule 56 of the Federal Rules of Civil Procedure provides that a party seeking to recover upon a claim, counterclaim or cross-claim may move for summary judgment at any time after the expiration of 20 days from the commencement of the action or after service of a motion for summary judgment by the adverse party, and that a party against whom a claim, counterclaim or cross-claim is asserted may move for summary judgment at any time. However, some rules, particularly Rule 113 of the Rules of Civil Practice of New York, specifically provide that a motion for summary judgment may not be made until issues have been joined, that is, only after an answer has been served.62 Under said rule, after issues have been joined, the motion for summary judgment may be made at any stage of the litigation.63 No fixed prescriptive period is provided. Like Rule 113 of the Rules of Civil Practice of New York, our rules also provide that a motion for summary judgment may not be made until issues have been joined, meaning, the plaintiff has to wait

for the answer before he can move for summary judgment.64 And like the New York rules, ours do not provide for a fixed reglementary period within which to move for summary judgment. This being so, the New York Supreme Court's interpretation of Rule 113 of the Rules of Civil Practice can be applied by analogy to the interpretation of Section 1, Rule 35, of our 1997 Rules of Civil Procedure. Under the New York rule, after the issues have been joined, the motion for summary judgment may be made at any stage of the litigation. And what exactly does the phrase "at any stage of the litigation" mean? In Ecker vs. Muzysh,65 the New York Supreme Court ruled: "PER CURIAM. Plaintiff introduced her evidence and the defendants rested on the case made by the plaintiff. The case was submitted. Owing to the serious illness of the trial justice, a decision was not rendered within sixty days after the final adjournment of the term at which the case was tried. With the approval of the trial justice, the plaintiff moved for a new trial under Section 442 of the Civil Practice Act. The plaintiff also moved for summary judgment under Rule 113 of the Rules of Civil Practice. The motion was opposed mainly on the ground that, by proceeding to trial, the plaintiff had waived her right to summary judgment and that the answer and the opposing affidavits raised triable issues. The amount due and unpaid under the contract is not in dispute. The Special Term granted both motions and the defendants have appealed. The Special Term properly held that the answer and the opposing affidavits raised no triable issue. Rule 113 of the Rules of Civil Practice and the Civil Practice Act prescribe no limitation as to the time when a motion for summary judgment must be made. The object of Rule 113 is to empower the court to summarily determine whether or not a bona fide issue exists between the parties, and there is no limitation on the power of the court to make such a determination at any stage of the litigation." (emphasis ours) On the basis of the aforequoted disquisition, "any stage of the litigation" means that "even if the plaintiff has proceeded to trial, this does not preclude him from thereafter moving for summary judgment."66 In the case at bar, petitioner moved for summary judgment after pre-trial and before its scheduled date for presentation of evidence. Respondent Marcoses argue that, by agreeing to proceed to trial during the pre-trial conference, petitioner "waived" its right to summary judgment. This argument must fail in the light of the New York Supreme Court ruling which we apply by analogy to this case. In Ecker,67 the defendant opposed the motion for summary judgment on a ground similar to that raised by the Marcoses, that is, "that plaintiff had waived her right to summary judgment" by her act of proceeding to trial. If, as correctly ruled by the New York court, plaintiff was allowed to move for summary judgment even after trial and submission of the case for resolution, more so should we permit it in the present case where petitioner moved for summary judgment before trial. Therefore, the phrase "anytime after the pleading in answer thereto has been served" in Section 1, Rule 35 of our Rules of Civil Procedure means "at any stage of the litigation." Whenever it becomes evident at any stage of the litigation that no triable issue exists, or that the defenses raised by the defendant(s) are sham or frivolous, plaintiff may move for summary judgment. A contrary interpretation would go against the very objective of the Rule on Summary Judgment which is to

"weed out sham claims or defenses thereby avoiding the expense and loss of time involved in a trial."68 In cases with political undertones like the one at bar, adverse parties will often do almost anything to delay the proceedings in the hope that a future administration sympathetic to them might be able to influence the outcome of the case in their favor. This is rank injustice we cannot tolerate. The law looks with disfavor on long, protracted and expensive litigation and encourages the speedy and prompt disposition of cases. That is why the law and the rules provide for a number of devices to ensure the speedy disposition of cases. Summary judgment is one of them. Faithful therefore to the spirit of the law on summary judgment which seeks to avoid unnecessary expense and loss of time in a trial, we hereby rule that petitioner Republic could validly move for summary judgment any time after the respondents' answer was filed or, for that matter, at any subsequent stage of the litigation. The fact that petitioner agreed to proceed to trial did not in any way prevent it from moving for summary judgment, as indeed no genuine issue of fact was ever validly raised by respondent Marcoses. This interpretation conforms with the guiding principle enshrined in Section 6, Rule 1 of the 1997 Rules of Civil Procedure that the "[r]ules should be liberally construed in order to promote their objective of securing a just, speedy and inexpensive disposition of every action and proceeding."69 Respondents further allege that the motion for summary judgment was based on respondents' answer and other documents that had long been in the records of the case. Thus, by the time the motion was filed on March 10, 2000, estoppel by laches had already set in against petitioner. We disagree. Estoppel by laches is the failure or neglect for an unreasonable or unexplained length of time to do that which, by exercising due diligence, could or should have been done earlier, warranting a presumption that the person has abandoned his right or declined to assert it.70 In effect, therefore, the principle of laches is one of estoppel because "it prevents people who have slept on their rights from prejudicing the rights of third parties who have placed reliance on the inaction of the original parties and their successors-in-interest".71 A careful examination of the records, however, reveals that petitioner was in fact never remiss in pursuing its case against respondent Marcoses through every remedy available to it, including the motion for summary judgment. Petitioner Republic initially filed its motion for summary judgment on October 18, 1996. The motion was denied because of the pending compromise agreement between the Marcoses and petitioner. But during the pre-trial conference, the Marcoses denied ownership of the Swiss funds, prompting petitioner to file another motion for summary judgment now under consideration by this Court. It was the subsequent events that transpired after the answer was filed, therefore, which prevented petitioner from filing the questioned motion. It was definitely not because of neglect or inaction that petitioner filed the (second) motion for summary judgment years after respondents' answer to the petition for forfeiture. In invoking the doctrine of estoppel by laches, respondents must show not only unjustified inaction but also that some unfair injury to them might result unless the action is barred.72 This, respondents failed to bear out. In fact, during the pre-trial conference, the Marcoses disclaimed ownership of the Swiss deposits. Not being the owners, as they claimed, respondents did not have any vested right or interest which could be adversely affected by petitioner's alleged inaction.

But even assuming for the sake of argument that laches had already set in, the doctrine of estoppel or laches does not apply when the government sues as a sovereign or asserts governmental rights.73 Nor can estoppel validate an act that contravenes law or public policy.74 As a final point, it must be emphasized that laches is not a mere question of time but is principally a question of the inequity or unfairness of permitting a right or claim to be enforced or asserted.75 Equity demands that petitioner Republic should not be barred from pursuing the people's case against the Marcoses. (2) The Propriety of Forfeiture The matter of summary judgment having been thus settled, the issue of whether or not petitioner Republic was able to prove its case for forfeiture in accordance with the requisites of Sections 2 and 3 of RA 1379 now takes center stage. The law raises the prima facie presumption that a property is unlawfully acquired, hence subject to forfeiture, if its amount or value is manifestly disproportionate to the official salary and other lawful income of the public officer who owns it. Hence, Sections 2 and 6 of RA 137976 provide: xxx xxx

Section 2. Filing of petition. Whenever any public officer or employee has acquired during his incumbency an amount or property which is manifestly out of proportion to his salary as such public officer or employee and to his other lawful income and the income from legitimately acquired property, said property shall be presumed prima facie to have been unlawfully acquired. xxx xxx

Sec. 6. Judgment If the respondent is unable to show to the satisfaction of the court that he has lawfully acquired the property in question, then the court shall declare such property in question, forfeited in favor of the State, and by virtue of such judgment the property aforesaid shall become the property of the State.Provided, That no judgment shall be rendered within six months before any general election or within three months before any special election. The Court may, in addition, refer this case to the corresponding Executive Department for administrative or criminal action, or both. From the above-quoted provisions of the law, the following facts must be established in order that forfeiture or seizure of the Swiss deposits may be effected: (1) ownership by the public officer of money or property acquired during his incumbency, whether it be in his name or otherwise, and (2) the extent to which the amount of that money or property exceeds, i. e., is grossly disproportionate to, the legitimate income of the public officer. That spouses Ferdinand and Imelda Marcos were public officials during the time material to the instant case was never in dispute. Paragraph 4 of respondent Marcoses' answer categorically admitted the allegations in paragraph 4 of the petition for forfeiture as to the personal circumstances of Ferdinand E. Marcos as a public official who served without interruption as Congressman, Senator, Senate President and President of the Republic of the Philippines from December 1, 1965

to February 25, 1986.77 Likewise, respondents admitted in their answer the contents of paragraph 5 of the petition as to the personal circumstances of Imelda R. Marcos who once served as a member of the Interim Batasang Pambansa from 1978 to 1984 and as Metro Manila Governor, concurrently Minister of Human Settlements, from June 1976 to February 1986.78 Respondent Mrs. Marcos also admitted in paragraph 10 of her answer the allegations of paragraph 11 of the petition for forfeiture which referred to the accumulated salaries of respondents Ferdinand E. Marcos and Imelda R. Marcos.79 The combined accumulated salaries of the Marcos couple were reflected in the Certification dated May 27, 1986 issued by then Minister of Budget and Management Alberto Romulo.80 The Certification showed that, from 1966 to 1985, Ferdinand E. Marcos and Imelda R. Marcos had accumulated salaries in the amount of P1,570,000 and P718,750, respectively, or a total of P2,288,750: Ferdinand E. Marcos, as President 1966-1976 1977-1984 1985 at P60,000/year at P100,000/year at P110,000/year P660,000 800,000 110,000 P1,570,00 Imelda R. Marcos, as Minister June 1976-1985 at P75,000/year P718,000

In addition to their accumulated salaries from 1966 to 1985 are the Marcos couple's combined salaries from January to February 1986 in the amount of P30,833.33. Hence, their total accumulated salaries amounted to P2,319,583.33. Converted to U.S. dollars on the basis of the corresponding peso-dollar exchange rates prevailing during the applicable period when said salaries were received, the total amount had an equivalent value of $304,372.43. The dollar equivalent was arrived at by using the official annual rates of exchange of the Philippine peso and the US dollar from 1965 to 1985 as well as the official monthly rates of exchange in January and February 1986 issued by the Center for Statistical Information of the Bangko Sentral ng Pilipinas. Prescinding from the aforesaid admissions, Section 4, Rule 129 of the Rules of Court provides that: Section 4. Judicial admissions An admission, verbal or written, made by a party in the course of the proceedings in the same case does not require proof. The admission may be contradicted only by showing that it was made through palpable mistake or that no such admission was made.81 It is settled that judicial admissions may be made: (a) in the pleadings filed by the parties; (b) in the course of the trial either by verbal or written manifestations or stipulations; or (c) in other stages of judicial proceedings, as in the pre-trial of the case.82 Thus, facts pleaded in the petition and answer, as in the case at bar, are deemed admissions of petitioner and respondents, respectively, who are not permitted to contradict them or subsequently take a position contrary to or inconsistent with such admissions.83

The sum of $304,372.43 should be held as the only known lawful income of respondents since they did not file any Statement of Assets and Liabilities (SAL), as required by law, from which their net worth could be determined. Besides, under the 1935 Constitution, Ferdinand E. Marcos as President could not receive "any other emolument from the Government or any of its subdivisions and instrumentalities".84 Likewise, under the 1973 Constitution, Ferdinand E. Marcos as President could "not receive during his tenure any other emolument from the Government or any other source."85 In fact, his management of businesses, like the administration of foundations to accumulate funds, was expressly prohibited under the 1973 Constitution: Article VII, Sec. 4(2) The President and the Vice-President shall not, during their tenure, hold any other office except when otherwise provided in this Constitution, nor may they practice any profession, participate directly or indirectly in the management of any business, or be financially interested directly or indirectly in any contract with, or in any franchise or special privilege granted by the Government or any other subdivision, agency, or instrumentality thereof, including any government owned or controlled corporation. Article VII, Sec. 11 No Member of the National Assembly shall appear as counsel before any court inferior to a court with appellate jurisdiction, x x x. Neither shall he, directly or indirectly, be interested financially in any contract with, or in any franchise or special privilege granted by the Government, or any subdivision, agency, or instrumentality thereof including any government owned or controlled corporation during his term of office. He shall not intervene in any matter before any office of the government for his pecuniary benefit. Article IX, Sec. 7 The Prime Minister and Members of the Cabinet shall be subject to the provision of Section 11, Article VIII hereof and may not appear as counsel before any court or administrative body, or manage any business, or practice any profession, and shall also be subject to such other disqualification as may be provided by law. Their only known lawful income of $304,372.43 can therefore legally and fairly serve as basis for determining the existence of a prima facie case of forfeiture of the Swiss funds. Respondents argue that petitioner was not able to establish a prima facie case for the forfeiture of the Swiss funds since it failed to prove the essential elements under Section 3, paragraphs (c), (d) and (e) of RA 1379. As the Act is a penal statute, its provisions are mandatory and should thus be construed strictly against the petitioner and liberally in favor of respondent Marcoses. We hold that it was not for petitioner to establish the Marcoses' other lawful income or income from legitimately acquired property for the presumption to apply because, as between petitioner and respondents, the latter were in a better position to know if there were such other sources of lawful income. And if indeed there was such other lawful income, respondents should have specifically stated the same in their answer. Insofar as petitioner Republic was concerned, it was enough to specify the known lawful income of respondents. Section 9 of the PCGG Rules and Regulations provides that, in determining prima facie evidence of ill-gotten wealth, the value of the accumulated assets, properties and other material possessions of those covered by Executive Order Nos. 1 and 2 must be out of proportion to the known lawful income of such persons. The respondent Marcos couple did not file any Statement of Assets and Liabilities (SAL) from which their net worth could be determined. Their failure to file their SAL was in itself a violation of law and to allow them to successfully assail the Republic for not presenting their SAL would reward them for their violation of the law.

Further, contrary to the claim of respondents, the admissions made by them in their various pleadings and documents were valid. It is of record that respondents judicially admitted that the money deposited with the Swiss banks belonged to them. We agree with petitioner that respondent Marcoses made judicial admissions of their ownership of the subject Swiss bank deposits in their answer, the General/Supplemental Agreements, Mrs. Marcos' Manifestation and Constancia dated May 5, 1999, and the Undertaking dated February 10, 1999. We take note of the fact that the Associate Justices of the Sandiganbayan were unanimous in holding that respondents had made judicial admissions of their ownership of the Swiss funds. In their answer, aside from admitting the existence of the subject funds, respondents likewise admitted ownershipthereof. Paragraph 22 of respondents' answer stated: 22. Respondents specifically DENY PARAGRAPH 23 insofar as it alleges that respondents clandestinely stashed the country's wealth in Switzerland and hid the same under layers and layers of foundations and corporate entities for being false, the truth being that respondents' aforesaid properties were lawfully acquired. (emphasis supplied) By qualifying their acquisition of the Swiss bank deposits as lawful, respondents unwittingly admitted their ownership thereof. Respondent Mrs. Marcos also admitted ownership of the Swiss bank deposits by failing to deny under oath the genuineness and due execution of certain actionable documents bearing her signature attached to the petition. As discussed earlier, Section 11, Rule 886 of the 1997 Rules of Civil Procedure provides that material averments in the complaint shall be deemed admitted when not specifically denied. The General87 and Supplemental88 Agreements executed by petitioner and respondents on December 28, 1993 further bolstered the claim of petitioner Republic that its case for forfeiture was proven in accordance with the requisites of Sections 2 and 3 of RA 1379. The whereas clause in the General Agreement declared that: WHEREAS, the FIRST PARTY has obtained a judgment from the Swiss Federal Tribunal on December 21, 1990, that the $356 million belongs in principle to the Republic of the Philippines provided certain conditionalities are met, but even after 7 years, the FIRST PARTY has not been able to procure a final judgment of conviction against the PRIVATE PARTY. While the Supplemental Agreement warranted, inter alia, that: In consideration of the foregoing, the parties hereby agree that the PRIVATE PARTY shall be entitled to the equivalent of 25% of the amount that may be eventually withdrawn from said $356 million Swiss deposits. The stipulations set forth in the General and Supplemental Agreements undeniably indicated the manifest intent of respondents to enter into a compromise with petitioner. Corollarily, respondents' willingness to agree to an amicable settlement with the Republic only affirmed their ownership of the Swiss deposits for the simple reason that no person would acquiesce to any concession over such huge dollar deposits if he did not in fact own them.

Respondents make much capital of the pronouncement by this Court that the General and Supplemental Agreements were null and void.89 They insist that nothing in those agreements could thus be admitted in evidence against them because they stood on the same ground as an accepted offer which, under Section 27, Rule 13090of the 1997 Rules of Civil Procedure, provides that "in civil cases, an offer of compromise is not an admission of any liability and is not admissible in evidence against the offeror." We find no merit in this contention. The declaration of nullity of said agreements was premised on the following constitutional and statutory infirmities: (1) the grant of criminal immunity to the Marcos heirs was against the law; (2) the PCGG's commitment to exempt from all forms of taxes the properties to be retained by the Marcos heirs was against the Constitution; and (3) the government's undertaking to cause the dismissal of all cases filed against the Marcoses pending before the Sandiganbayan and other courts encroached on the powers of the judiciary. The reasons relied upon by the Court never in the least bit even touched on the veracity and truthfulness of respondents' admission with respect to their ownership of the Swiss funds. Besides, having made certain admissions in those agreements, respondents cannot now deny that they voluntarily admitted owning the subject Swiss funds, notwithstanding the fact that the agreements themselves were later declared null and void. The following observation of Sandiganbayan Justice Catalino Castaeda, Jr. in the decision dated September 19, 2000 could not have been better said: x x x The declaration of nullity of the two agreements rendered the same without legal effects but it did not detract from the admissions of the respondents contained therein. Otherwise stated, the admissions made in said agreements, as quoted above, remain binding on the respondents.91 A written statement is nonetheless competent as an admission even if it is contained in a document which is not itself effective for the purpose for which it is made, either by reason of illegality, or incompetency of a party thereto, or by reason of not being signed, executed or delivered. Accordingly, contracts have been held as competent evidence of admissions, although they may be unenforceable.92 The testimony of respondent Ferdinand Marcos, Jr. during the hearing on the motion for the approval of the Compromise Agreement on April 29, 1998 also lent credence to the allegations of petitioner Republic that respondents admitted ownership of the Swiss bank accounts. We quote the salient portions of Ferdinand Jr.'s formal declarations in open court: ATTY. FERNANDO: Mr. Marcos, did you ever have any meetings with PCGG Chairman Magtanggol C. Gunigundo? F. MARCOS, JR.: Yes. I have had very many meetings in fact with Chairman. ATTY. FERNANDO: Would you recall when the first meeting occurred?

PJ GARCHITORENA: In connection with what? ATTY. FERNANDO: In connection with the ongoing talks to compromise the various cases initiated by PCGG against your family? F. MARCOS, JR.: The nature of our meetings was solely concerned with negotiations towards achieving some kind of agreement between the Philippine government and the Marcos family. The discussions that led up to the compromise agreement were initiated by our then counsel Atty. Simeon Mesina x x x.93 xxx ATTY. FERNANDO: What was your reaction when Atty. Mesina informed you of this possibility? F. MARCOS, JR.: My reaction to all of these approaches is that I am always open, we are always open, we are very much always in search of resolution to the problem of the family and any approach that has been made us, we have entertained. And so my reaction was the same as what I have always why not? Maybe this is the one that will finally put an end to this problem.94 xxx ATTY. FERNANDO: Basically, what were the true amounts of the assets in the bank? PJ GARCHITORENA: So, we are talking about liquid assets here? Just Cash? F. MARCOS, JR.: Well, basically, any assets. Anything that was under the Marcos name in any of the banks in Switzerland which may necessarily be not cash.95 xxx PJ GARCHITORENA: xxx xxx xxx xxx xxx xxx

x x x What did you do in other words, after being apprised of this contract in connection herewith? F. MARCOS, JR.: I assumed that we are beginning to implement the agreement because this was forwarded through the Philippine government lawyers through our lawyers and then, subsequently, to me. I was a little surprised because we hadn't really discussed the details of the transfer of the funds, what the bank accounts, what the mechanism would be. But nevertheless, I was happy to see that as far as the PCGG is concerned, that the agreement was perfected and that we were beginning to implement it and that was a source of satisfaction to me because I thought that finally it will be the end.96 Ferdinand Jr.'s pronouncements, taken in context and in their entirety, were a confirmation of respondents' recognition of their ownership of the Swiss bank deposits. Admissions of a party in his testimony are receivable against him. If a party, as a witness, deliberately concedes a fact, such concession has the force of a judicial admission.97 It is apparent from Ferdinand Jr.'s testimony that the Marcos family agreed to negotiate with the Philippine government in the hope of finally putting an end to the problems besetting the Marcos family regarding the Swiss accounts. This was doubtlessly an acknowledgment of ownership on their part. The rule is that the testimony on the witness stand partakes of the nature of a formal judicial admission when a party testifies clearly and unequivocally to a fact which is peculiarly within his own knowledge.98 In her Manifestation99 dated May 26, 1998, respondent Imelda Marcos furthermore revealed the following: That respondent Imelda R. Marcos owns 90% of the subject matter of the above-entitled case, being the sole beneficiary of the dollar deposits in the name of the various foundations alleged in the case; That in fact only 10% of the subject matter in the above-entitled case belongs to the estate of the late President Ferdinand E. Marcos; xxx xxx xxx

Respondents' ownership of the Swiss bank accounts as borne out by Mrs. Marcos' manifestation is as bright as sunlight. And her claim that she is merely a beneficiary of the Swiss deposits is belied by her own signatures on the appended copies of the documents substantiating her ownership of the funds in the name of the foundations. As already mentioned, she failed to specifically deny under oath the authenticity of such documents, especially those involving "William Saunders" and "Jane Ryan" which actually referred to Ferdinand Marcos and Imelda Marcos, respectively. That failure of Imelda Marcos to specifically deny the existence, much less the genuineness and due execution, of the instruments bearing her signature, was tantamount to a judicial admission of the genuineness and due execution of said instruments, in accordance with Section 8, Rule 8100 of the 1997 Rules of Civil Procedure. Likewise, in her Constancia101 dated May 6, 1999, Imelda Marcos prayed for the approval of the Compromise Agreement and the subsequent release and transfer of the $150 million to the rightful owner. She further made the following manifestations: xxx xxx xxx

2. The Republic's cause of action over the full amount is its forfeiture in favor of the government if found to be ill-gotten. On the other hand, the Marcoses defend that it is a legitimate asset. Therefore, both parties have an inchoate right of ownership over the account. If it turns out that the account is of lawful origin, the Republic may yield to the Marcoses. Conversely, the Marcoses must yield to the Republic. (underscoring supplied) xxx xxx xxx

3. Consistent with the foregoing, and the Marcoses having committed themselves to helping the less fortunate, in the interest of peace, reconciliation and unity, defendant MADAM IMELDA ROMUALDEZ MARCOS, in firm abidance thereby, hereby affirms her agreement with the Republic for the release and transfer of the US Dollar 150 million for proper disposition, without prejudice to the final outcome of the litigation respecting the ownership of the remainder. Again, the above statements were indicative of Imelda's admission of the Marcoses' ownership of the Swiss deposits as in fact "the Marcoses defend that it (Swiss deposits) is a legitimate (Marcos) asset." On the other hand, respondents Maria Imelda Marcos-Manotoc, Ferdinand Marcos, Jr. and Maria Irene Marcos-Araneta filed a motion102 on May 4, 1998 asking the Sandiganbayan to place the res (Swiss deposits) in custodia legis: 7. Indeed, the prevailing situation is fraught with danger! Unless the aforesaid Swiss deposits are placed in custodia legis or within the Court's protective mantle, its dissipation or misappropriation by the petitioner looms as a distinct possibility. Such display of deep, personal interest can only come from someone who believes that he has a marked and intimate right over the considerable dollar deposits. Truly, by filing said motion, the Marcos children revealed their ownership of the said deposits. Lastly, the Undertaking103 entered into by the PCGG, the PNB and the Marcos foundations on February 10, 1999, confirmed the Marcoses' ownership of the Swiss bank deposits. The subject Undertaking brought to light their readiness to pay the human rights victims out of the funds held in escrow in the PNB. It stated: WHEREAS, the Republic of the Philippines sympathizes with the plight of the human rights victims-plaintiffs in the aforementioned litigation through the Second Party, desires to assist in the satisfaction of the judgment awards of said human rights victims-plaintiffs, by releasing, assigning and or waiving US$150 million of the funds held in escrow under the Escrow Agreements dated August 14, 1995, although the Republic is not obligated to do so under final judgments of the Swiss courts dated December 10 and 19, 1997, and January 8, 1998; WHEREAS, the Third Party is likewise willing to release, assign and/or waive all its rights and interests over said US$150 million to the aforementioned human rights victims-plaintiffs. All told, the foregoing disquisition negates the claim of respondents that "petitioner failed to prove that they acquired or own the Swiss funds" and that "it was only by arbitrarily isolating and taking certain statements made by private respondents out of context that petitioner was able to treat these as judicial admissions." The Court is fully aware of the relevance, materiality and implications of every pleading and document submitted in this case. This Court carefully scrutinized the proofs

presented by the parties. We analyzed, assessed and weighed them to ascertain if each piece of evidence rightfully qualified as an admission. Owing to the far-reaching historical and political implications of this case, we considered and examined, individually and totally, the evidence of the parties, even if it might have bordered on factual adjudication which, by authority of the rules and jurisprudence, is not usually done by this Court. There is no doubt in our mind that respondent Marcoses admitted ownership of the Swiss bank deposits. We have always adhered to the familiar doctrine that an admission made in the pleadings cannot be controverted by the party making such admission and becomes conclusive on him, and that all proofs submitted by him contrary thereto or inconsistent therewith should be ignored, whether an objection is interposed by the adverse party or not.104 This doctrine is embodied in Section 4, Rule 129 of the Rules of Court: SEC. 4. Judicial admissions. An admission, verbal or written, made by a party in the course of the proceedings in the same case, does not require proof. The admission may be contradicted only by showing that it was made through palpable mistake or that no such admission was made.105 In the absence of a compelling reason to the contrary, respondents' judicial admission of ownership of the Swiss deposits is definitely binding on them. The individual and separate admissions of each respondent bind all of them pursuant to Sections 29 and 31, Rule 130 of the Rules of Court: SEC. 29. Admission by co-partner or agent. The act or declaration of a partner or agent of the party within the scope of his authority and during the existence of the partnership or agency, may be given in evidence against such party after the partnership or agency is shown by evidence other than such act or declaration. The same rule applies to the act or declaration of a joint owner, joint debtor, or other person jointly interested with the party.106 SEC. 31. Admission by privies. Where one derives title to property from another, the act, declaration, or omission of the latter, while holding the title, in relation to the property, is evidence against the former.107 The declarations of a person are admissible against a party whenever a "privity of estate" exists between the declarant and the party, the term "privity of estate" generally denoting a succession in rights.108 Consequently, an admission of one in privity with a party to the record is competent.109 Without doubt, privity exists among the respondents in this case. And where several co-parties to the record are jointly interested in the subject matter of the controversy, the admission of one is competent against all.110 Respondents insist that the Sandiganbayan is correct in ruling that petitioner Republic has failed to establish aprima facie case for the forfeiture of the Swiss deposits. We disagree. The sudden turn-around of the Sandiganbayan was really strange, to say the least, as its findings and conclusions were not borne out by the voluminous records of this case. Section 2 of RA 1379 explicitly states that "whenever any public officer or employee has acquired during his incumbency an amount of property which is manifestly out of proportion to his salary as such public officer or employee and to his other lawful income and the income from legitimately acquired property, said property shall be presumed prima facie to have been unlawfully acquired. x x x"

The elements which must concur for this prima facie presumption to apply are: (1) the offender is a public officer or employee; (2) he must have acquired a considerable amount of money or property during his incumbency; and (3) said amount is manifestly out of proportion to his salary as such public officer or employee and to his other lawful income and the income from legitimately acquired property. It is undisputed that spouses Ferdinand and Imelda Marcos were former public officers. Hence, the first element is clearly extant. The second element deals with the amount of money or property acquired by the public officer during his incumbency. The Marcos couple indubitably acquired and owned properties during their term of office. In fact, the five groups of Swiss accounts were admittedly owned by them. There is proof of the existence and ownership of these assets and properties and it suffices to comply with the second element. The third requirement is met if it can be shown that such assets, money or property is manifestly out of proportion to the public officer's salary and his other lawful income. It is the proof of this third element that is crucial in determining whether a prima facie presumption has been established in this case. Petitioner Republic presented not only a schedule indicating the lawful income of the Marcos spouses during their incumbency but also evidence that they had huge deposits beyond such lawful income in Swiss banks under the names of five different foundations. We believe petitioner was able to establish the prima facie presumption that the assets and properties acquired by the Marcoses were manifestly and patently disproportionate to their aggregate salaries as public officials. Otherwise stated, petitioner presented enough evidence to convince us that the Marcoses had dollar deposits amounting to US $356 million representing the balance of the Swiss accounts of the five foundations, an amount way, way beyond their aggregate legitimate income of only US$304,372.43 during their incumbency as government officials. Considering, therefore, that the total amount of the Swiss deposits was considerably out of proportion to the known lawful income of the Marcoses, the presumption that said dollar deposits were unlawfully acquired was duly established. It was sufficient for the petition for forfeiture to state the approximate amount of money and property acquired by the respondents, and their total government salaries. Section 9 of the PCGG Rules and Regulations states: Prima Facie Evidence. Any accumulation of assets, properties, and other material possessions of those persons covered by Executive Orders No. 1 and No. 2, whose value is out of proportion to their known lawful income is prima facie deemed ill-gotten wealth. Indeed, the burden of proof was on the respondents to dispute this presumption and show by clear and convincing evidence that the Swiss deposits were lawfully acquired and that they had other legitimate sources of income. A presumption is prima facie proof of the fact presumed and, unless the fact thus prima facie established by legal presumption is disproved, it must stand as proved.111 Respondent Mrs. Marcos argues that the foreign foundations should have been impleaded as they were indispensable parties without whom no complete determination of the issues could be made.

She asserts that the failure of petitioner Republic to implead the foundations rendered the judgment void as the joinder of indispensable parties was a sine qua non exercise of judicial power. Furthermore, the non-inclusion of the foreign foundations violated the conditions prescribed by the Swiss government regarding the deposit of the funds in escrow, deprived them of their day in court and denied them their rights under the Swiss constitution and international law.112 The Court finds that petitioner Republic did not err in not impleading the foreign foundations. Section 7, Rule 3 of the 1997 Rules of Civil Procedure,113 taken from Rule 19b of the American Federal Rules of Civil Procedure, provides for the compulsory joinder of indispensable parties. Generally, an indispensable party must be impleaded for the complete determination of the suit. However, failure to join an indispensable party does not divest the court of jurisdiction since the rule regarding indispensable parties is founded on equitable considerations and is not jurisdictional. Thus, the court is not divested of its power to render a decision even in the absence of indispensable parties, though such judgment is not binding on the non-joined party.114 An indispensable party115 has been defined as one: [who] must have a direct interest in the litigation; and if this interest is such that it cannot be separated from that of the parties to the suit, if the court cannot render justice between the parties in his absence, if the decree will have an injurious effect upon his interest, or if the final determination of the controversy in his absence will be inconsistent with equity and good conscience. There are two essential tests of an indispensable party: (1) can relief be afforded the plaintiff without the presence of the other party? and (2) can the case be decided on its merits without prejudicing the rights of the other party?116 There is, however, no fixed formula for determining who is an indispensable party; this can only be determined in the context and by the facts of the particular suit or litigation. In the present case, there was an admission by respondent Imelda Marcos in her May 26, 1998 Manifestation before the Sandiganbayan that she was the sole beneficiary of 90% of the subject matter in controversy with the remaining 10% belonging to the estate of Ferdinand Marcos.117 Viewed against this admission, the foreign foundations were not indispensable parties. Their non-participation in the proceedings did not prevent the court from deciding the case on its merits and according full relief to petitioner Republic. The judgment ordering the return of the $356 million was neither inimical to the foundations' interests nor inconsistent with equity and good conscience. The admission of respondent Imelda Marcos only confirmed what was already generally known: that the foundations were established precisely to hide the money stolen by the Marcos spouses from petitioner Republic. It negated whatever illusion there was, if any, that the foreign foundations owned even a nominal part of the assets in question. The rulings of the Swiss court that the foundations, as formal owners, must be given an opportunity to participate in the proceedings hinged on the assumption that they owned a nominal share of the assets.118 But this was already refuted by no less than Mrs. Marcos herself. Thus, she cannot now argue that the ruling of the Sandiganbayan violated the conditions set by the Swiss court. The directive given by the Swiss court for the foundations to participate in the proceedings was for the purpose of protecting whatever nominal interest they might have had in the assets as formal owners. But inasmuch as their ownership was subsequently repudiated by Imelda Marcos, they could no longer be considered as indispensable parties and their participation in the proceedings became unnecessary.

In Republic vs. Sandiganbayan,119 this Court ruled that impleading the firms which are the res of the action was unnecessary: "And as to corporations organized with ill-gotten wealth, but are not themselves guilty of misappropriation, fraud or other illicit conduct in other words, the companies themselves are not the object or thing involved in the action, the res thereof there is no need to implead them either. Indeed, their impleading is not proper on the strength alone of their having been formed with ill-gotten funds, absent any other particular wrongdoing on their part Such showing of having been formed with, or having received ill-gotten funds, however strong or convincing, does not, without more, warrant identifying the corporations in question with the person who formed or made use of them to give the color or appearance of lawful, innocent acquisition to illegally amassed wealth at the least, not so as place on the Government the onus of impleading the former with the latter in actions to recover such wealth. Distinguished in terms of juridical personality and legal culpability from their erring members or stockholders, said corporations are not themselves guilty of the sins of the latter, of the embezzlement, asportation, etc., that gave rise to the Government's cause of action for recovery; their creation or organization was merely the result of their members' (or stockholders') manipulations and maneuvers to conceal the illegal origins of the assets or monies invested therein. In this light, they are simply the res in the actions for the recovery of illegally acquired wealth, and there is, in principle, no cause of action against them and no ground to implead them as defendants in said actions." Just like the corporations in the aforementioned case, the foreign foundations here were set up to conceal the illegally acquired funds of the Marcos spouses. Thus, they were simply the res in the action for recovery of ill-gotten wealth and did not have to be impleaded for lack of cause of action or ground to implead them. Assuming arguendo, however, that the foundations were indispensable parties, the failure of petitioner to implead them was a curable error, as held in the previously cited case of Republic vs. Sandiganbayan:120 "Even in those cases where it might reasonably be argued that the failure of the Government to implead the sequestered corporations as defendants is indeed a procedural abberation, as where said firms were allegedly used, and actively cooperated with the defendants, as instruments or conduits for conversion of public funds and property or illicit or fraudulent obtention of favored government contracts, etc., slight reflection would nevertheless lead to the conclusion that the defect is not fatal, but one correctible under applicable adjective rules e.g., Section 10, Rule 5 of the Rules of Court [specifying the remedy of amendment during trial to authorize or to conform to the evidence]; Section 1, Rule 20 [governing amendments before trial], in relation to the rule respecting omission of so-called necessary or indispensable parties, set out in Section 11, Rule 3 of the Rules of Court. It is relevant in this context to advert to the old familiar doctrines that the omission to implead such parties "is a mere technical defect which can be cured at any stage of the proceedings even after judgment"; and that, particularly in the case of indispensable parties, since their presence and participation is essential to the very life of the action, for without them no judgment may be rendered, amendments of the complaint in order to implead them should be freely allowed, even on appeal, in fact even after rendition of judgment by this Court, where it appears that the complaint otherwise indicates their identity and character as such indispensable parties."121

Although there are decided cases wherein the non-joinder of indispensable parties in fact led to the dismissal of the suit or the annulment of judgment, such cases do not jibe with the matter at hand. The better view is that non-joinder is not a ground to dismiss the suit or annul the judgment. The rule on joinder of indispensable parties is founded on equity. And the spirit of the law is reflected in Section 11, Rule 3122 of the 1997 Rules of Civil Procedure. It prohibits the dismissal of a suit on the ground of non-joinder or misjoinder of parties and allows the amendment of the complaint at any stage of the proceedings, through motion or on order of the court on its own initiative.123 Likewise, jurisprudence on the Federal Rules of Procedure, from which our Section 7, Rule 3124 on indispensable parties was copied, allows the joinder of indispensable parties even after judgment has been entered if such is needed to afford the moving party full relief.125 Mere delay in filing the joinder motion does not necessarily result in the waiver of the right as long as the delay is excusable.126 Thus, respondent Mrs. Marcos cannot correctly argue that the judgment rendered by the Sandiganbayan was void due to the non-joinder of the foreign foundations. The court had jurisdiction to render judgment which, even in the absence of indispensable parties, was binding on all the parties before it though not on the absent party.127 If she really felt that she could not be granted full relief due to the absence of the foreign foundations, she should have moved for their inclusion, which was allowable at any stage of the proceedings. She never did. Instead she assailed the judgment rendered. In the face of undeniable circumstances and the avalanche of documentary evidence against them, respondent Marcoses failed to justify the lawful nature of their acquisition of the said assets. Hence, the Swiss deposits should be considered ill-gotten wealth and forfeited in favor of the State in accordance with Section 6 of RA 1379: SEC. 6. Judgment. If the respondent is unable to show to the satisfaction of the court that he has lawfully acquired the property in question, then the court shall declare such property forfeited in favor of the State, and by virtue of such judgment the property aforesaid shall become property of the State x x x. THE FAILURE TO PRESENT AUTHENTICATED TRANSLATIONS OF THE SWISS DECISIONS Finally, petitioner Republic contends that the Honorable Sandiganbayan Presiding Justice Francis Garchitorena committed grave abuse of discretion in reversing himself on the ground that the original copies of the authenticated Swiss decisions and their authenticated translations were not submitted to the court a quo. Earlier PJ Garchitorena had quoted extensively from the unofficial translation of one of these Swiss decisions in hisponencia dated July 29, 1999 when he denied the motion to release US$150 Million to the human rights victims. While we are in reality perplexed by such an incomprehensible change of heart, there might nevertheless not be any real need to belabor the issue. The presentation of the authenticated translations of the original copies of the Swiss decision was not de rigueur for the public respondent to make findings of fact and reach its conclusions. In short, the Sandiganbayan's decision was not dependent on the determination of the Swiss courts. For that matter, neither is this Court's. The release of the Swiss funds held in escrow in the PNB is dependent solely on the decision of this jurisdiction that said funds belong to the petitioner Republic. What is important is our own assessment of the sufficiency of the evidence to rule in favor of either petitioner Republic or respondent Marcoses. In this instance, despite the absence of the authenticated translations of the Swiss decisions, the evidence on hand tilts convincingly in favor of petitioner Republic.

WHEREFORE, the petition is hereby GRANTED. The assailed Resolution of the Sandiganbayan dated January 31, 2002 is SET ASIDE. The Swiss deposits which were transferred to and are now deposited in escrow at the Philippine National Bank in the estimated aggregate amount of US$658,175,373.60 as of January 31, 2002, plus interest, are hereby forfeited in favor of petitioner Republic of the Philippines.

CANELAND SUGAR CORP VS ALON

DECISION

AUSTRIA-MARTINEZ, J.:

On July 15, 1999, Caneland Sugar Corporation (petitioner) filed with the Regional Trial Court (RTC) of Silay City, Branch 40, a complaint for damages, injunction, and nullity of mortgage against the Land Bank of the Philippines (respondent) and Sheriff Eric B. de Vera, docketed as Civil Case No. 2067-40, praying for the following reliefs: issuance of a temporary restraining order enjoining respondent and the Sheriff from proceeding with the auction sale of petitioners property; declaration of nullity of any foreclosure sale to be held; declaration of nullity of the mortgage constituted over petitioners property covered by TCT No. T-11292 in favor of respondent; and award of damages.[1] On July 21, 1999, the RTC issued an Order holding in abeyance the auction sale set on July 23, 1999, as agreed upon by the parties.[2] Notwithstanding said directive, another foreclosure sale was scheduled on October 15, 1999. Per RTC Order dated October 14, 1999, the October 15 scheduled sale was held in abeyance; but re-scheduled the sale onNovember 15, 1999, for the following reasons:
However, P.D. 385 provides that it shall be mandatory for government financial institution to foreclose collaterals and/or securities for any loan, credit accommodations and/or guarantees granted by them whenever the arrearages on such account, including accrued interest and other charges amount to at least 20% of the total outstanding obligation

as appearing in the books of the financial institution. Moreover, no restraining order, temporary or permanent injunction shall be issued by the court against any government financial institution in any action taken by such institution in compliance with the mandatory foreclosure provided by said law. x x x The defendant Land Bank of the Philippines and Eric B. De Vera, Sheriff of this Court, are hereby authorized to proceed with the extrajudicial foreclosure sale on November 15, 1999.[3]

Petitioner filed a Motion for Reconsideration of the trial courts Order, but this was denied per Order dated November 8, 1999.[4] Petitioner then filed with the Court of Appeals (CA) a Petition for Certiorari and Prohibition with Injunction, docketed as CA-G.R. SP No. 56137. In a Decision[5] dated March 22, 2000, the CA, finding that the RTC did not commit any grave abuse of discretion, denied due course and dismissed the petition for lack of merit.[6] Petitioner sought reconsideration of the Decision, which was eventually denied by the CA in a Resolution dated April 17, 2000.[7] Hence, the present Petition for Review on Certiorari under Rule 45 of the Rules of Court. Petitioner contends in the main that the RTCs act of authorizing the foreclosure of its property amounts to a prejudgment of the case since it amounts to a ruling that respondent has a valid mortgage in its favor. Petitioner also argues, among others, that Presidential Decree (P.D.) No. 385 is not applicable inasmuch as at the time of the lease to Sunnix, Inc., the management and control of its operations has already been virtually taken over by respondent. On the other hand, respondent maintains that: P.D. No. 385 prohibits the issuance of an injunctive order against government financial institutions; the CA did not commit any grave abuse of discretion; the RTC Order merely dealt with the propriety of the injunctive order and not the validity of the mortgage; and the issue

of the propriety of the injunctive order has been rendered moot and academic by the foreclosure sale conducted and the issuance of a certificate of sale by the sheriff.[8] Based on the arguments of the parties, the principal issue is whether the CA erred in finding that the RTC did not commit grave abuse of discretion in not enjoining the extrajudicial foreclosure of the properties subject of this case. Without first resolving the foregoing issue, the Court finds that the petition should be denied for the sole reason that the act sought to be enjoined by petitioner is already fait accompli. In Transfield Philippines, Inc. v. Luzon Hydro Corporation,[9] the Court held that
[I]njunction would not lie where the acts sought to be enjoined have already become fait accompli or an accomplished or consummated act. In Ticzon v. Video Post Manila, Inc. this Court ruled that where the period within which the former employees were prohibited from engaging in or working for an enterprise that competed with their former employer the very purpose of the preliminary injunction has expired, any declaration upholding the propriety of the writ would be entirely useless as there would be no actual case or controversy between the parties insofar as the preliminary injunction is concerned.[10]

Records show that the foreclosure sale which petitioner sought to be enjoined by the RTC has already been carried out by the Sheriff, and in fact, a Certificate of Sale dated June 26, 2000 was issued to respondent.[11] There is, therefore, no more actual case or controversy between the parties insofar as the RTCs refusal to enjoin the sale is concerned, and any resolution by the Court of the impropriety or propriety of the RTCs refusal to issue any restraining or injunctive relief against the foreclosure sale will serve no purpose but merely lend further addle to Civil Case No. 2067-40 pending before the RTC. Nevertheless, even if petitioners quest for the issuance of an injunctive relief has been rendered moot and academic by the holding of the foreclosure sale

and issuance of Certificate of Sale, the Court finds it necessary to resolve the merits of the principal issue raised for the future guidance of both bench and bar. As the Court stated in Acop v.Guingona, Jr.,[12] courts will decide a question otherwise moot and academic if it is capable of repetition, yet evading review. Petitioner does not dispute its loan obligation with respondent. Petitioners bone of contention before the RTC is that the promissory notes are silent as to whether they were covered by the Mortgage Trust Indenture and Mortgage Participation on its property covered by TCT No. T-11292.[13] It does not categorically deny that these promissory notes are covered by the security documents. These vague assertions are, in fact, negative pregnants, i.e., denials pregnant with the admission of the substantial facts in the pleading responded to which are not squarely denied. As defined in Republic of the Philippines v. Sandiganbayan,[14] a negative pregnant is a form of negative expression which carries with it an affirmation or at least an implication of some kind favorable to the adverse party. It is a denial pregnant with an admission of the substantial facts alleged in the pleading. Where a fact is alleged with qualifying or modifying language and the words of the allegation as so qualified or modified are literally denied, has been held that the qualifying circumstances alone are denied while the fact itself is admitted. Petitioners allegations do not make out any justifiable basis for the granting of any injunctive relief. Even when the mortgagors were disputing the amount being sought from them, upon the non-payment of the loan, which was secured by the mortgage, the mortgaged property is properly subject to a foreclosure sale. This is in consonance with the doctrine that to authorize a temporary injunction, the plaintiff must show, at least prima facie, a right to the final relief.[15]

The foregoing conclusion finds greater force in light of the provisions of P.D. No. 385,[16] Section 1 of which, provides for a mandatory foreclosure, viz.:
Section 1. It shall be mandatory for government financial institutions, after the lapse of sixty (60) days from the issuance of this Decree, to foreclose the collaterals and/or securities for any loan, credit, accommodation, and/or guarantees granted by them whenever the arrearages on such account, including accrued interest and other charges, amount to at least twenty (20%) of the total outstanding obligations, including interest and other charges, as appearing in the books of account and/or related records of the financial institution concerned. This shall be without prejudice to the exercise by the government financial institution of such rights and/or remedies available to them under their respective contracts with their debtors, including the right to foreclose on loans, credits, accommodations, and or guarantees on which the arrearages are less than twenty percent (20%).

while Section 2 prohibits the issuance of restraining orders or injunctions against government financial institutions in any foreclosure action taken by such institutions, to wit:
Section 2. No restraining order, temporary or permanent injunction shall be issued by the court against any government financial institution in any action taken by such institution in compliance with the mandatory foreclosure provided in Section 1 hereof whether such restraining order, temporary or permanent injunction is sought by the borrower(s) or any third party or parties, except after due hearing in which it is established by the borrower and admitted by the government financial institution concerned that twenty percent (20%) of the outstanding arrearages had been paid after the filing of foreclosure proceedings.

Petitioner cannot find any solace in its contention that the case of Filipinas Marble Corporation v. Intermediate Appellate Court[17] is applicable to the present case. InFilipinas Marble, it was the DBP-imposed management of FMC that brought the corporation to ruin, not to mention that there were prima facie findings of mismanagement and misappropriation of the loan proceeds by DBP

and Bancom. Moreover, the liability of FMC for the loan, which was the basis of the mortgage being foreclosed, was not yet settled. These circumstances prompted the Court to grant an injunction against the foreclosure sale. The Court ruled
x x x P.D. 385 was never meant to protect officials of government lending institutions who take over the management of a borrower corporation, lead that corporation to bankruptcy through mismanagement or misappropriation of its funds, and who, after ruining it, use the mandatory provisions of the decree to avoid the consequences of their misdeeds. The designated officers of the government financing institution cannot simply walk away and then state that since the loans were obtained in the corporations name, then P.D. 385 must be peremptorily applied and that there is no way the borrower corporation can prevent the automatic foreclosure of the mortgage on its properties once the arrearages reach twenty percent (20%) of the total obligation no matter who was responsible.[18]

In the case at bench, petitioner does not deny its liability. While petitioner alleged that the management and control of its operations has already been virtually taken over by respondent, thus, implying that it was respondent that caused petitioner's present miserable financial state, this allegation is obviously merely an attempt to place itself under the Filipinas Marble situation in order to preempt the operation of P.D. No. 385. Petitioners claim is more appropriately threshed out and determined after trial on the merits. The Court likewise cannot sustain petitioner's argument that the RTCs refusal to grant any injunctive relief amounts to a prejudgment of the issues before it. The RTCs sole basis for allowing the foreclosure sale to proceed is P.D. No. 385. It did not make any finding or disposition on the issue of the validity of the mortgage.

In any event, such issue of the validity of the mortgage, not to mention the issue of the nullity of the foreclosure sale as well as petitioners prayer for damages, still has to be resolved in the trial court. As ruled in Philippine National Bank v. Court of Appeals,[19] to wit: In the instant case, aside from the principal action for damages, private respondent sought the issuance of a temporary restraining order and writ of preliminary injunction to enjoin the foreclosure sale in order to prevent an alleged irreparable injury to private respondent. It is settled that these injunctive reliefs are preservative remedies for the protection of substantive rights and interests. Injunction is not a cause of action in itself but merely a provisional remedy, an adjunct to a main suit. When the act sought to be enjoined ha[d] become fait accompli, only the prayer for provisional remedy should be denied. However, the trial court should still proceed with the determination of the principal action so that an adjudication of the rights of the parties can be had.[20] (Emphasis supplied) WHEREFORE, the petition is DENIED.